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Bear Of The Day: Arrow Electronics (ARW)

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Arrow Electronics (ARW - Free Report) is a Zacks Rank #5 (Strong Sell) as earnings estimates have tracked lower after a recent earnings beat.  The company makes electronic components for a wide range of industries. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.


Arrow Electronics, Inc. engages in the provision of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions. It operates under the Global Components Business and Global Enterprise Computing Solutions (Global ECS) segments. The Global Components segment focuses on the marketing and distribution of electronic components enabled by a comprehensive range of value-added capabilities and services. The Global ECS segment is involved in providing comprehensive computing solutions and services. The company was founded by Robert W. Wentworth and John C. Waddell in 1935 and is headquartered in Centennial, CO.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of Arrow Electronics, I see four straight beats of the Zacks Consensus Estimate. The most recent quarter was a beat with the company posting $2.41 when $2.31 was expected.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For ARW I see annual estimates moving lower of late.

The current year (2024) consensus number moved lower from $11.53 to $10.37 over the last 60 days. 

The next year has moved from $15.61 to $14.45 over the last 60 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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