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Bull Of The Day: Arrow Electronics (ARW)

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Arrow Electronics (ARW - Free Report) is a Zacks Rank #1 (Strong Buy) and sports the growth divergence that I love to see.  I am much more interested in growth stocks than I am value stocks so when I see a stock with a strong Growth Style Score and a weak Value Style Score I know that I am on the right path.  Value investors and growth investors are looking for different things... and ARW has what I am looking for in a growth stock.  

Let's take a deeper look at this stock in this Bull of the Day article.


Arrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in 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 consisting primarily of 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, including data-center, cloud, security, and analytics solutions, as well as 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, as well as manages service providers, contract manufacturers, and other commercial customers. Arrow Electronics, Inc. was founded in 1935 and is based in Centennial, Colorado.

Recent Earnings

On October 29, ARW posted an impressive beat.  The company reported EPS of $2.08 when the Zacks Consensus was $1.66.  The 42 cent difference translates into a 25% positive earnings surprise.

Before that, the company posted a 10% beat and a 1% beat as well as a 12% miss in the first quarter of this year.

All in all, I would say that is a pretty good earnings track record.

Estimate Movement

Following the recent beat, estimates have moved higher.  I see this quarter has moved from $2.31 to $2.66 while next quarter has also increased from $1.49 to $1.77.

Those are big jumps in estimates, but the Zacks Rank keys in more on the annual numbers.

ARW is expected to post EPS of $7.26 this year and $8.69 next year.  Both of those numbers have increased over the last thirty days.

Those big increases in earnings estimates have helped push this stock to a Zacks Rank #1 (Strong Buy).


I really like the valuation here for ARW.  I see a 11.8x forward earnings multiple and only 1.3x price to book multiple.  Both of those metrics are very low and it makes me wonder why the value score is so low.  The company did post year over year sales growth, but it was only 2% and that might have impacted the price to sales multiple of 0.24x and that is a little low for my liking.


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