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Arrow Electronics (ARW) Q4 Earnings & Revenues Beat Estimates

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Arrow Electronics (ARW - Free Report) reported impressive fourth-quarter 2021 results. The company’s adjusted earnings of $5.37 per share beat the Zacks Consensus Estimate of $4.42. The bottom line improved a whopping 69% on a year-over-year basis.

In the fourth quarter of 2021, the company reported revenues of $9.02 billion, up 7% from the year-ago quarter. The top line surpassed the consensus mark of $8.85 billion.

Arrow Electronics has been witnessing the increasing demand for electronic components and software, cloud and security solutions. However, supply-chain constraints have been limiting its ability to capitalize on the growing demand.

Arrow stock has outperformed the Zacks Computer and Technology Sector over the past year. ARW stock has gained 27.9% in the last 12 months while the sector increased 7.5% over the same time frame.

One-Year Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

Segment Details

Adjusted revenues from Global Components increased 13% year over year to $6.68 billion. Region-wise, the segment’s revenues from America jumped 32% year over year. Adjusted sales from Europe increased 21% year over year. Global Components’ contributions from the Asia Pacific were flat on a year-over-year basis.

Adjusted revenues from Global Enterprise Computing Solutions (“ECS”) came in at $2.34 billion, down 8% year over year. Region-wise, the segment’s revenues from America fell 9%, while Europe’s revenues decreased 6%.

Non-GAAP operating income from Global Components and Global ECS were $437 million and $157 million, respectively.

Margins

Arrow Electronics’ non-GAAP gross profit climbed 29.5% to $1.2 billion in the fourth quarter from the prior quarter’s $923.7 million. Non-GAAP gross margin expanded 240 basis points (bps) year over year to 13.3%.

Non-GAAP operating income surged 56% to $525 million in the October-December 2021 quarter from the year-ago quarter’s $336 million. Non-GAAP operating margin grew 180 bps to 5.8%.

Balance Sheet and Cash Flow

Arrow Electronics exited the fourth quarter with cash and cash equivalents of $222.2 million compared with the previous quarter’s $215.9 million.

Long-term debt was $2.24 billion, higher than $2.04 billion at the end of the third quarter.

The New York-based electronic components distributor generated $27.9 million of cash in operating activities during the fourth quarter. In full-year 2022, ARW generated operating cash flow of $419 million.

In the fourth quarter of 2021, Arrow Electronics returned $250 million worth of shares to its shareholders through the stock-repurchase program. In the full year of 2021, the company repurchased stock worth $912 million. It has $163 million remaining under its current share-repurchase authorization.

Guidance

For the first quarter of 2022, sales are estimated between $8.35 billion and $8.95 billion.

Global Components sales are projected in the range of $6.675-$6.975 billion. Global ECS sales are anticipated in the band of $1.675-$1.975 billion.

Interest expenses will presumably be about $35 million. As a result, the company projects non-GAAP earnings per share (EPS) in the range of $4.44-$4.60.

The company expects changes in foreign currencies to boost first-quarter sales by approximately $160 million and EPS by 10 cents.

Zacks Rank & Stocks to Consider

Arrow Electronics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector include Analog Devices (ADI - Free Report) , CDW Corporation (CDW - Free Report) and NVIDIA Corporation (NVDA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Analog Devices’ first-quarter fiscal 2022 earnings has been revised upward by a penny to $1.79 per share over the past 30 days. For fiscal 2022, earnings estimates have moved upward by 1% to $7.53 per share over the past 30 days.

Analog Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 6.1%. Shares of ADI have rallied 12.2% in the trailing 12 months.

The Zacks Consensus Estimate for CDW Corporation’s first-quarter 2022 earnings has been revised upward by five cents to $1.87 per share over the past 60 days. For 2022, earnings estimates have moved upward 12 cents to $8.73 per share in the past 60 days.

CDW Corporation’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 12.2%. CDW stock has rallied 29.7% over the past year.

The Zacks Consensus Estimate for NVIDIA’s fourth-quarter fiscal 2022 earnings has been revised upward to $1.22 per share from $1.09 90 days ago. For fiscal 2022, earnings estimates have been revised upward by a couple of cents to $4.35 per share in the past 30 days.

NVIDIA’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 7.7%. Shares of NVDA have increased 84.7% over the past year.