Arrow Electronics, Inc.

Arrow Electronics saw sales rise 6% in the second quarter as business remained strong across all of its segments. The company has surprised on estimates 2 out of the last 4 quarters on average of 1.21%. Arrow has a forward P/E of 9.26.

Company Description

Arrow Electronics, Inc. (ARW - Analyst Report) provides products and services to industrial and commercial users of electronic components. The company is a supply channel partner for 700 suppliers and 140,000 original equipment manufacturers (OEMs) through its network of more than 300 locations in 50 countries.

ARW, a Zacks #1 Rank (Strong Buy), has customers in telecommunications, information systems, automotive and transportation, medical and life sciences and industrial equipment.

Arrow Beats Wall Street Estimates for the Second Quarter by 9.09%

On July 23, Arrow reported second quarter earnings that easily surprised on earnings by 9.09%, or 7 cents a share. Net income was $96.2 million, or 79 cents per share. Excluding a 5 cent restructuring charge, net income was 84 cents per share. Covering analysts expected 77 cents per share.

Sales rose 8% to $4.35 billion from $4.04 billion in the year ago quarter. Excluding the impact of the acquisition of LOGIX S.A., which occurred on June 2, sales were up 6% from 2007.

The company was bullish on both of its segments: global components and global enterprise computing solutions. Sales in global components rose 7% year over year while sales in the global enterprise computing solutions grew 9%.

"We continue to deliver on our strategy with near-record levels of performance across the board, despite the backdrop of an unsettled economy," said William E. Mitchell, chairman and chief executive officer.

"We occupy a unique, value-added space in the supply chain with growth opportunities across many customer segments, end markets, geographies, and technologies. We will continue to create value for not only our business partners, but also our shareholders as we move forward with the strategy we have laid out to capture both profitable growth and improve our return on invested capital," he said.

ARW Provides Third Quarter Guidance

Arrow said it is monitoring its marketplace closely. The company forecast third quarter sales in the range of $4.1 to $4.4 billion. Earnings per share are expected to be in the range of 73 cents to 78 cents per share.

Consensus Estimates Rise for the Third Quarter and Full Year

Given the company's bullish guidance, covering analysts responded by raising estimates on both the third quarter and the full year. For the third quarter, consensus estimates jumped to 75 cents from 72 cents per share in the last week, reflecting Arrow's guidance range.

For the full year, consensus estimates rose 5% to $3.30 per share from $3.14 per share in the last 7 days.

Value Fundamentals

Arrow Electronics has a forward P/E of 9.26. Its price-to-book (P/B) is 1.04. The company has a solid 5-year return on equity (ROE) of 10.97%.