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Arrow Electronics (ARW)
NYSE:ARW
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Arrow Electronics
(NYSE:ARW)
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Rating:64Neutral
Price Target:
$119.00
▲(4.97% Upside)
Arrow Electronics' overall stock score reflects a mixed financial performance with modest revenue growth but operational efficiency and cash flow challenges. The technical analysis indicates bearish momentum, while the valuation suggests reasonable pricing. The earnings call provides a cautiously optimistic outlook, highlighting strategic growth in the ECS segment and a positive future outlook.
Positive Factors
Strategic Expansion in ECS Business
The ECS segment's growth through strategic outsourcing and market expansion indicates a strong potential for sustained revenue growth and market leadership.
Improved Leverage Management
Improved leverage management enhances financial stability and flexibility, allowing for better capital allocation and risk management.
Positive Outlook for 2026
A positive outlook for the global components market supports long-term growth prospects, driven by strong demand in key sectors like transportation and industrial.
Negative Factors
Cash Flow Challenges
Significant decrease in free cash flow raises concerns about the company's ability to fund operations and growth initiatives without external financing.
ECS Margin Impact Due to Charge
Margin impact from charges in the ECS segment highlights potential profitability challenges, affecting overall financial performance.
Operational Efficiency Challenges
Declining EBIT and EBITDA margins indicate struggles in maintaining cost efficiency, which could impact long-term profitability and competitiveness.
Arrow Electronics (ARW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.92B
Dividend YieldN/A
Average Volume (3M)478.53K
Price to Earnings (P/E)12.7
Beta (1Y)0.99
Revenue Growth3.16%
EPS Growth1.09%
CountryUS
Employees21,520
SectorTechnology
Sector Strength88
IndustryTechnology Distributors
Share Statistics
EPS (TTM)2.41
Shares Outstanding51,511,356
10 Day Avg. Volume537,189
30 Day Avg. Volume478,529
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)1.05
Price to Sales (P/S)0.22
P/FCF Ratio5.81
Enterprise Value/Market Cap1.57
Enterprise Value/Revenue0.32
Enterprise Value/Gross Profit2.85
Enterprise Value/Ebitda10.57
Forecast
1Y Price Target
$107.00Price Target Upside-5.62% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering2
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Arrow Electronics Business Overview & Revenue Model
Company DescriptionArrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Global Components and Global Enterprise Computing Solutions. The Global Components segment markets and distributes semiconductor products and related services; passive, electro-mechanical, and interconnect products, including capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products, as well as other products and services. The Global Enterprise Computing Solutions segment offers computing solutions, such as datacenter, cloud, security, and analytics solutions. This segment provides access to various services, including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. The company serves original equipment manufacturers, value-added resellers, managed service providers, contract manufacturers, and other commercial customers. Arrow Electronics, Inc. was founded in 1935 and is based in Centennial, Colorado.
How the Company Makes MoneyArrow Electronics generates revenue through several key streams. Its primary revenue comes from the sale of electronic components, including semiconductors, passive components, and interconnect products. The company also earns significant income from its Global Enterprise Computing Solutions segment, which offers a range of IT solutions, including servers, storage, and networking products. Additionally, Arrow provides value-added services such as logistics, supply chain management, and technical support, which enhance customer relationships and drive repeat business. Strategic partnerships with leading technology manufacturers further bolster Arrow's market position and revenue potential, as these alliances allow the company to offer comprehensive solutions tailored to customer needs.
Arrow Electronics Earnings Call Summary
Earnings Call Date:Oct 30, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 05, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth and strategic advancements, particularly in the ECS segment. However, it also detailed challenges such as a significant charge impacting margins and slower recovery in certain customer segments. The overall sentiment is cautiously optimistic with signs of gradual recovery.Q3-2025 Updates
Positive Updates
Revenue and Earnings Performance
Arrow Electronics delivered revenue above the midpoint of guidance and earnings per share above the high end of guidance for Q3 2025. Sales for the third quarter increased by $890 million year-over-year to $7.7 billion, marking a 13% increase versus the prior year.
Strategic Expansion in ECS Business
The ECS business experienced a 15% sales increase year-over-year to $2.2 billion, with ECS billings reaching $5.2 billion, up 14% year-over-year. The segment is growing through strategic outsourcing engagements and expanding its addressable market.
Resolution of Compliance Issue in China
Arrow's Chinese subsidiaries were placed on a U.S. Department of Commerce entity list but were removed after ten days, allowing resumption of normal business activities.
Growth in APAC and Key Markets
The APAC region showed significant growth with a 12% sequential increase in sales, driven by industrial, compute, consumer, and EV momentum in transportation sectors.
Positive Outlook for 2026
Indicators suggest a gradual recovery in the global components market. Leading indicators such as book-to-bill ratios remain above parity across all regions.
Negative Updates
ECS Margin Impact Due to Charge
A $21 million charge was taken in the ECS segment, largely due to lower profit expectations on multiyear contracts. This reduced the consolidated non-GAAP gross margin by 30 basis points.
Challenges in Mass Market Recovery
Mass market customers are recovering more slowly than larger OEMs, which is a headwind to profit margins and not atypical of prior cycles.
Regional and Customer Mix Headwinds
Global components gross margins were impacted by regional and customer mix dynamics, with APAC outpacing other regions contributing to a profit margin headwind.
Company Guidance
During Arrow Electronics' third quarter 2025 earnings call, the company delivered revenue of $7.7 billion, surpassing the midpoint of their guidance, with a 13% year-over-year increase. The global components segment achieved $5.6 billion in sales, marking a 5% sequential growth, while the enterprise computing solutions (ECS) segment reported $2.2 billion in sales, reflecting a 15% year-over-year increase. Despite a non-GAAP gross margin of 10.8%, down 70 basis points from the previous year, Arrow managed a non-GAAP operating income of $217 million. The third quarter also saw a $21 million charge impacting ECS, reducing the overall gross margin by 30 basis points. Non-GAAP diluted EPS was $2.41, exceeding guidance due to favorable sales results and lower interest expenses. Looking ahead, Arrow forecasts fourth-quarter sales between $7.8 billion and $8.4 billion, with non-GAAP EPS guidance ranging from $3.44 to $3.64. The company highlighted the gradual recovery in global components, with strong demand in transportation and industrial markets, and a promising outlook for cloud and AI infrastructure investments in ECS.Arrow Electronics Financial Statement Overview
Summary
Arrow Electronics shows modest revenue growth and improved net profit margins, but faces challenges in operational efficiency and cash flow generation. The balance sheet reflects improved leverage and stable equity, yet cash flow issues could pose risks if not addressed.Income Statement
Arrow Electronics shows a modest revenue growth of 3.12% in the TTM period, recovering from previous declines. The gross profit margin has slightly decreased to 11.10% from 11.79% in the previous year, indicating some pressure on cost management. The net profit margin improved to 1.62% in the TTM, reflecting better profitability. However, EBIT and EBITDA margins have declined, suggesting operational efficiency challenges.Balance Sheet
The company's debt-to-equity ratio has improved to 0.49 in the TTM, indicating better leverage management compared to previous years. Return on equity stands at 7.79%, showing a moderate return for shareholders. The equity ratio is stable, reflecting a balanced capital structure, but the overall return on equity has decreased from previous highs.Cash Flow
Free cash flow has significantly decreased by 64.11% in the TTM, raising concerns about cash generation. The operating cash flow to net income ratio is low at 0.01, indicating potential cash flow issues. However, the free cash flow to net income ratio remains strong at 0.88, suggesting that the company is still generating cash relative to its net income.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 29.39B | 27.92B | 33.11B | 37.12B | 34.48B | 28.67B |
| Gross Profit | 3.26B | 3.29B | 4.15B | 4.84B | 4.20B | 3.19B |
| EBITDA | 879.28M | 1.12B | 1.67B | 2.26B | 1.76B | 1.09B |
| Net Income | 475.87M | 392.07M | 903.50M | 1.43B | 1.11B | 584.44M |
Balance Sheet | ||||||
| Total Assets | 24.53B | 21.76B | 21.73B | 21.76B | 19.54B | 17.05B |
| Cash, Cash Equivalents and Short-Term Investments | 213.61M | 188.81M | 218.05M | 176.91M | 222.19M | 373.62M |
| Total Debt | 3.13B | 3.39B | 3.81B | 3.77B | 2.63B | 2.26B |
| Total Liabilities | 18.05B | 15.93B | 15.85B | 16.15B | 14.19B | 11.90B |
| Stockholders Equity | 6.40B | 5.76B | 5.81B | 5.55B | 5.28B | 5.09B |
Cash Flow | ||||||
| Free Cash Flow | 168.01M | 1.04B | 622.16M | -111.91M | 335.93M | 1.24B |
| Operating Cash Flow | 190.56M | 1.13B | 705.45M | -33.08M | 418.98M | 1.36B |
| Investing Cash Flow | 9.57M | -94.44M | -72.32M | -57.71M | -60.12M | -138.79M |
| Financing Cash Flow | -310.87M | -956.83M | -666.22M | 109.78M | -463.30M | -1.23B |
Arrow Electronics Technical Analysis
Positive
113.37
Price Trends
111.10
Positive
116.83
Negative
117.74
Negative
Market Momentum
0.59
Negative
58.66
Neutral
74.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARW, the sentiment is Positive. The current price of 113.37 is above the 20-day moving average (MA) of 112.93, above the 50-day MA of 111.10, and below the 200-day MA of 117.74, indicating a neutral trend. The MACD of 0.59 indicates Negative momentum. The RSI at 58.66 is Neutral, neither overbought nor oversold. The STOCH value of 74.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARW.
Arrow Electronics Risk Analysis
Arrow Electronics disclosed 25 risk factors in its most recent earnings report. Arrow Electronics reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arrow Electronics Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.48B | 18.06 | 9.30% | 1.02% | 3.19% | -4.91% | |
69 Neutral | $12.25B | 15.12 | 9.98% | 1.15% | 6.95% | 19.19% | |
67 Neutral | $4.05B | 18.57 | 4.71% | 2.77% | -2.30% | -29.75% | |
64 Neutral | $5.92B | 12.73 | 7.70% | ― | 3.16% | 1.09% | |
64 Neutral | $894.82M | 12.82 | 8.11% | ― | -4.88% | 2.57% | |
62 Neutral | $2.66B | 19.95 | 8.51% | ― | -6.69% | -51.74% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
ARW
Arrow Electronics
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2.13%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.