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Analyst Blog

Arrow Electronics Inc. (ARW - Analyst Report) recently introduced its cloud portal especially designed for providing field-programmable gate array (FPGA) power solutions to clients in North America, and EMEA region. The company’s latest Arrow FPGA Power Designer will offer an excellent platform to maximize the total power distribution process.

The new FPGA Power Designer has various features including advanced FPGA products from Altera Corp. (ALTR - Analyst Report) and a wide range of converters. Arrow Lighting Designer combined with this new cloud-based channel is expected to improve the entire power design process. Management averred that, with the help of this new platform, the engineers will be able to easily configure the power supply system in less time.

The company’s newly introduced product range including ArrowSphere, UC in the Cloud solutions and Live Virtual Help Desk services are likely to mitigate the increasing demand in the industry and help to enhance the revenue streams of its clients. Additionally, the company’s broad portfolio of products and services and its continued efforts to provide maximum consumer satisfaction have done both – elevated company position and rendered it adequately secure to warrant a substantial market share in the present scenario.

However, Arrow Electronics recently reported total sales of $5.15 billion in the second quarter of 2012, down 7% year over year and 5.3% sequentially. The current macro-economic challenges prevailing in the European region and slow growth in China adversely affected the company’s businesses in the quarter.

Arrow currently faces ominous competition from major players of the industry, which include Richardson Electronics Ltd. and Avnet Inc. (AVT - Analyst Report) . In order to retain its position in the global market, it is imperative that the company continues to make such momentous undertakings, keeping in mind the betterment of the organization in both the long and short run.

The current Zacks Consensus Estimate for the third quarter of 2012 is $1.04, reflecting a year-over-year growth of (13.52%). Estimates for 2012 and 2013 are $4.53 and $5.07, representing annual growth of (12.64%) and 11.82%, respectively. We currently maintain an ‘Underperform’ recommendation on Arrow. The stock carries a Zacks #3 Rank, translating into a short-term (1-3 months) ‘Hold’ rating.

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