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Arrow Electronics Inc. (ARW - Analyst Report) is set to report fourth-quarter fiscal 2013 results on Feb 5. Last quarter, the company posted a negative earnings surprise of 1.67%. Let us see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Electronic component distributor Arrow delivered lower-than-expected third-quarter 2013 results. We believe that Arrow’s core strength of providing best-in-class services and easy-to-acquire technologies are expected to bolster its growth in the future. The company’s recent associations with International Business Machines (IBM - Analyst Report) and Dell also remain the positives going forward.

Additionally, the company’s positive commentary about enhanced productivity, annual cost savings and expected contributions from Europe remain the growth drivers. However, the cyclicality of the components business and competition from peers could pose headwinds for the company.

Earnings Whispers?

Our proven model does not conclusively show that Arrow will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.62 per share. Hence, the difference is 0.00%.

Zacks Rank: Arrow’s Zacks Rank #3 (Hold), when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Advance Auto Parts Inc. (AAP - Analyst Report), Earnings ESP of +2.56% and a Zacks Rank #1 (Strong Buy)

ON Semiconductor Corp. (ONNN - Analyst Report), Earnings ESP of +14.29% and a Zacks Rank #2 (Buy)

 

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