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Arrow Electronics (ARW)
NYSE:ARW

Arrow Electronics (ARW) AI Stock Analysis

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Arrow Electronics

(NYSE:ARW)

Rating:71Outperform
Price Target:
Arrow Electronics displays a solid financial foundation and reasonable valuation, bolstered by strong cash flow management and positive earnings call outcomes. The stock shows upward technical momentum, though caution is advised due to potential overbought conditions. Despite challenges such as declining gross margins and tariff uncertainties, the company's ability to exceed guidance and maintain stability positions it well for future growth.
Positive Factors
Cash Flow
Arrow's cash flow grew to $326M due to a favorable move in accounts payable.
Earnings
ARW delivered year-over-year billings growth in the ECS segment.
Supply Chain
ARW's supply chain management and integration services were accretive to operating results.
Negative Factors
Guidance
Revenue and earnings guidance for the upcoming quarter are significantly below expectations, impacting the stock's performance.
Stock Rating
The timing of recovery remains unclear, leading to a downgrade in the stock rating to Underperform.
Tariffs
Significant uncertainty remains with the potential impact of tariffs on end demand.

Arrow Electronics (ARW) vs. SPDR S&P 500 ETF (SPY)

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 makes money through the sale of electronic components and enterprise computing solutions. Its Global Components segment generates revenue by distributing electronic components to industrial and commercial customers, providing design, engineering, and supply chain services. The Global Enterprise Computing Solutions segment earns revenue by delivering enterprise computing products, services, and solutions to value-added resellers, managed service providers, and system integrators. Key revenue streams include the distribution of semiconductors and computing products, as well as the provision of supply chain management and logistics services. The company also forms strategic partnerships with leading technology manufacturers and suppliers, which enhances its product offerings and contributes significantly to its earnings.

Arrow Electronics Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 7.68%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
Arrow Electronics demonstrated strong performance in exceeding sales and earnings guidance, with notable growth in the Enterprise Computing Solutions segment and improved book-to-bill ratios. However, challenges such as declining gross margins and the uncertain impact of tariffs pose risks to future performance.
Q1-2025 Updates
Positive Updates
Exceeded Guidance in Sales and Earnings
Arrow Electronics reported consolidated sales of $6.8 billion, exceeding their guidance range, and non-GAAP diluted EPS of $1.80, which was above the guided range.
Growth in Enterprise Computing Solutions
Enterprise Computing Solutions sales were $2 billion, 18% higher year-over-year, with billings growth of 5% compared to the same period last year.
Positive Book-to-Bill Ratios
Improved book-to-bill ratios throughout the quarter, now at or above parity in all three regions, indicating a potential cyclical turning point.
Strong Cash Flow and Inventory Management
Generated $352 million in cash flow from operations, marking the seventh consecutive quarter of positive cash flow generation. Inventory levels declined by over $1 billion from their peak.
Negative Updates
Decline in Gross Margin
Consolidated non-GAAP gross margin was 11.3%, down approximately 120 basis points versus the prior year, primarily due to overall mix in both global components and ECS.
Impact of Tariffs
Significant complexity and uncertainty due to tariffs, with potential 2-4% impact on global components sales not included in the guidance, adding risk to future performance.
Company Guidance
In the recent Arrow Electronics First Quarter 2025 Earnings Call, the company reported consolidated sales of $6.8 billion, surpassing their guidance range and remaining flat year-over-year on a constant currency basis. The Global Components segment achieved sales of $4.8 billion, above the guidance range, with a flat sequential performance in constant currency terms. The Enterprise Computing Solutions (ECS) segment generated sales of $2 billion, marking an 18% increase year-over-year or 19% in constant currency. ECS billings rose by 5% compared to the same period last year. The first quarter non-GAAP gross margin stood at 11.3%, while the non-GAAP operating income was $179 million, representing 2.6% of sales. In terms of future guidance, the company expects second-quarter sales to be between $6.7 billion and $7.3 billion, with Global Components sales anticipated to range from $4.8 billion to $5.2 billion. The ECS segment is projected to generate sales between $1.9 billion and $2.1 billion. Arrow Electronics also highlighted potential impacts from tariffs, estimating an incremental increase in Global Components sales by 2 to 4 percentage points sequentially, although this has not been factored into their revenue guidance. Non-GAAP diluted earnings per share for the second quarter is expected to be between $1.90 and $2.10.

Arrow Electronics Financial Statement Overview

Summary
Arrow Electronics demonstrates a stable financial foundation with moderate profitability and robust cash flow generation. Despite facing revenue contraction, the company maintains healthy margins and conservative leverage. The balance sheet reflects a sound position with a focus on maintaining financial stability. Continued enhancement of profitability metrics and revenue growth will be crucial for future performance improvements.
Income Statement
65
Positive
Arrow Electronics shows a mixed performance in TTM. The gross profit margin is 11.24% and net profit margin is 1.40%, indicating stable but not exceptional profitability. Revenue has decreased from the previous year, showcasing a revenue contraction trend. EBIT and EBITDA margins stand at 2.81% and 3.05%, respectively, reflecting moderate operational efficiency. The trajectory indicates caution in revenue growth despite steady margins.
Balance Sheet
73
Positive
The company maintains a stable balance sheet with a debt-to-equity ratio of 0.48, indicating a conservative leverage position. Return on equity (ROE) is at 6.55%, showing moderate profitability for shareholders. The equity ratio of 27.69% suggests a reasonable proportion of assets financed by equity. Overall, Arrow Electronics demonstrates financial stability with manageable leverage, though growth in equity returns remains moderate.
Cash Flow
78
Positive
Arrow Electronics exhibits robust cash flow management. The operating cash flow to net income ratio is 2.78, highlighting strong cash conversion capabilities. Free cash flow has decreased slightly but remains positive at $1.02 billion, indicating solid free cash flow generation despite a challenging revenue environment. This positions the company well for future financial commitments.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
27.81B27.92B33.11B37.12B34.48B28.67B
Gross Profit
3.13B3.29B4.15B4.84B4.20B3.19B
EBIT
781.73M768.56M1.47B2.07B1.56B894.51M
EBITDA
848.26M984.44M1.67B2.26B1.78B1.10B
Net Income Common Stockholders
388.19M392.07M903.50M1.43B1.11B584.44M
Balance SheetCash, Cash Equivalents and Short-Term Investments
242.81M188.81M218.05M176.91M222.19M373.62M
Total Assets
20.26B21.76B21.73B21.76B19.54B17.05B
Total Debt
3.58B3.12B3.81B3.77B2.63B2.26B
Net Debt
3.34B2.93B3.59B3.60B2.40B1.88B
Total Liabilities
14.49B15.93B15.85B16.15B14.19B11.90B
Stockholders Equity
5.70B5.76B5.81B5.55B5.28B5.09B
Cash FlowFree Cash Flow
1.02B1.04B622.16M-111.91M335.93M1.24B
Operating Cash Flow
1.08B1.13B705.45M-33.08M418.98M1.36B
Investing Cash Flow
-95.03M-94.44M-72.32M-57.71M-60.12M-138.79M
Financing Cash Flow
-981.28M-956.83M-666.22M109.78M-463.30M-1.23B

Arrow Electronics Technical Analysis

Technical Analysis Sentiment
Positive
Last Price119.91
Price Trends
50DMA
109.07
Positive
100DMA
110.17
Positive
200DMA
118.05
Positive
Market Momentum
MACD
3.11
Positive
RSI
60.91
Neutral
STOCH
30.33
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 119.91 is above the 20-day moving average (MA) of 117.82, above the 50-day MA of 109.07, and above the 200-day MA of 118.05, indicating a bullish trend. The MACD of 3.11 indicates Positive momentum. The RSI at 60.91 is Neutral, neither overbought nor oversold. The STOCH value of 30.33 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 3 New Risks
1.
Acquisitions, divestitures, or joint ventures may cause the company to experience operating difficulties and other consequences that may negatively impact the company's business, financial condition, and operating results, and the company may not be able to successfully consummate favorable transactions or integrate acquired businesses. Q4, 2024
2.
If the company is unable to implement its Operating Expense Efficiency Plan effectively, it could materially adversely impact financial results. Q4, 2024
3.
The company is subject to a variety of claims, investigations and litigation that could adversely affect the company's results of operations and harm the company's reputation, including intellectual property rights claims. Q4, 2024

Arrow Electronics Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$1.67B19.8810.11%0.69%4.21%6.38%
SNSNX
72
Outperform
$10.19B15.178.40%1.38%4.62%16.28%
ARARW
71
Outperform
$6.22B16.516.68%-11.13%-43.00%
AVAVT
70
Outperform
$4.17B13.946.42%2.61%-10.52%-42.40%
68
Neutral
$4.22B26.4311.37%-8.73%-35.37%
67
Neutral
$927.66M14.807.32%-14.07%-9.65%
61
Neutral
$11.29B10.17-6.88%2.97%7.41%-8.93%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ARW
Arrow Electronics
119.91
-8.64
-6.72%
AVT
Avnet
50.94
-1.11
-2.13%
NSIT
Insight Enterprises
136.93
-59.06
-30.13%
CNXN
PC Connection
66.87
2.18
3.37%
SCSC
ScanSource
41.06
-6.92
-14.42%
SNX
TD SYNNEX Corporation
124.89
-2.16
-1.70%

Arrow Electronics Corporate Events

Executive/Board ChangesShareholder Meetings
Arrow Electronics Amends By-laws and Elects Directors
Neutral
May 8, 2025

On May 6, 2025, Arrow Electronics‘ Board of Directors approved an amendment and restatement of the company’s By-laws, introducing changes such as enhanced advance notice requirements for shareholder proposals, powers for meeting chairs, and proxy card color specifications. Additionally, at the 2025 Annual Meeting of Shareholders, ten directors were elected, Ernst & Young LLP’s appointment as the independent auditor was ratified, executive compensation was approved, and a proposal to replace supermajority voting provisions with simple majority standards was passed.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.