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Is Arrow Electronics (ARW) a Great Value Stock Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Arrow Electronics (ARW - Free Report) is a stock many investors are watching right now. ARW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.22, while its industry has an average P/E of 10.36. Over the past year, ARW's Forward P/E has been as high as 11.80 and as low as 9.04, with a median of 10.46.

We also note that ARW holds a PEG ratio of 0.46. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ARW's PEG compares to its industry's average PEG of 0.55. ARW's PEG has been as high as 1.58 and as low as 0.45, with a median of 1.15, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ARW has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.32.

Finally, our model also underscores that ARW has a P/CF ratio of 8.84. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.02. Over the past year, ARW's P/CF has been as high as 11.29 and as low as -78.07, with a median of 9.58.

These are only a few of the key metrics included in Arrow Electronics's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ARW looks like an impressive value stock at the moment.


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