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Arrow Electronics (ARW) Q1 Earnings: What's in the Cards?

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Arrow Electronics Inc. (ARW - Free Report) is set to report first-quarter 2017 results on May 4. Last quarter, the company delivered a negative earnings surprise of 0.5%. Let's see how things are shaping up for this announcement.

Factors at Play

The electronic component distributor’s fourth-quarter 2016 results missed estimates. Also, revenues decreased year over year.

Recently, Arrow teamed up with Cypress Semiconductor Corp. to deliver pioneering solutions that will facilitate new, inventive business models for the Internet of Things (IoT). The collaboration will allow Arrow to leverage Cypress' IoT connectivity platform to help its customers in providing analytic platforms, cloud and security technologies. This will bring continuous and complete IoT solutions to market.

In its Jun 2015 report, the McKinsey Global Institute projected that IoT applications could reach as much as $11.1 trillion every year by 2025.  We believe that by adding IoT cloud into its existing solutions, Arrow will gain the most from the continued proliferation of IoT devices.

Notably, original equipment manufacturers, contract manufacturers and commercial customers are selecting Arrow’s distribution channels for marketing their products. The company’s core strength in providing best-in-class services and easy-to-acquire technologies should drive growth.

Meanwhile, incremental sales from strategic acquisitions, such as Computerlinks, are expected to boost the top line, going forward. However, uncertain economic conditions, a high debt burden and competition from the likes of Avnet (AVT - Free Report) remain concerns.

Arrow Electronics, Inc. Price and EPS Surprise

Earnings Whispers

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

Zacks ESP: Arrow’s ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.44 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank:Arrow’s Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise. We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are some 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:

Moody's Corporation (MCO - Free Report) , with an Earnings ESP of +7.38% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MSCI Inc (MSCI - Free Report) , with an Earnings ESP of +1.19% and a Zacks Rank #3

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