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Arrow Electronics (ARW) Beats Q3 Earnings & Revenue Estimates

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Arrow Electronics (ARW - Free Report) reported impressive third-quarter 2021 results. The company’s adjusted earnings of $4.04 per share beat the Zacks Consensus Estimate of $3.52. The bottom line improved a whopping 94% on a year-over-year basis.

In the third quarter of 2021, the company reported revenues of $8.51 billion, up 18% from the year-ago quarter. The top line surpassed the consensus mark of $8.49 billion by a margin of 0.32%.

Arrow Electronics has been witnessing increasing demand for electronic components and software, cloud and security solutions. However, supply-chain constraints have been limiting its ability to capitalize on growing demand. In the Enterprise Computing Solutions (“ECS”) segment, spending priorities shifted toward workload management as firms started complicated and transformational projects.

Arrow Electronics, Inc. Price, Consensus and EPS Surprise Arrow Electronics, Inc. Price, Consensus and EPS Surprise

Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote

Segment Details

Adjusted revenues from Global Components increased 24% year over year to $6.62 billion. Region wise, the segment’s revenues from America jumped 33.1% year over year. Adjusted sales from Europe increased 33.4% year over year. Global Components’ contribution from the Asia Pacific improved 15.1%.

Adjusted revenues from Global ECS came in at $1.89 billion, down 2.8% year over year. Region wise, the segment’s adjusted revenues from the Americas fell 5.9%, while Europe revenues increased 3.1%.

The non-GAAP operating income from Global Components and Global ECS were $392 million and $79 million, respectively.

Margins

Arrow Electronics’ non-GAAP gross profit climbed 36.5% to $1.08 billion in this quarter from the prior quarter’s $788.1 million.

The non-GAAP operating income surged 68.3% to $411 million in the July-September quarter from the year-ago quarter’s $244.3 million.

Balance Sheet and Cash Flow

Arrow Electronics exited the third quarter with cash and cash equivalents of $215.9 million compared with the previous quarter’s $244.1 million.

Long-term debt was $2.04 billion, slightly higher than $1.9 billion at the end of second quarter.

The NY-based electronic components distributor generated $114.2 million of cash in operating activities during the third quarter.

In the third quarter of 2021, Arrow Electronics returned $250 million worth of shares to its shareholders through the stock-repurchase program. It has $413 million remaining under its current share-repurchase authorization.

Guidance

For the fourth quarter of 2021, sales are estimated between $8.55 billion and $9.15 billion.

Global Components sales are projected at $6.35-$6.65 billion. Global ECS sales are anticipated to be $2.2-$2.5 billion.

Interest expenses will presumably be about $32 million. As a result, the company projects non-GAAP earnings per share at $4.37-$4.53.

The company expects changes in foreign currencies to boost the fourth-quarter sales by approximately $15 million and earnings per share by a penny.

Zacks Rank & Stocks to Consider

Arrow currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the broader technology sector include Applied Materials (AMAT - Free Report) , Broadcom (AVGO - Free Report) and Perficient (PRFT - Free Report) , all carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Applied Materials, Broadcom and Perficient is currently pegged at 19.4%, 15% and 18%, respectively.