Back to top

Image: Bigstock

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

Read MoreHide Full Article

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Arrow Electronics (ARW - Free Report) . ARW is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 5.67 right now. For comparison, its industry sports an average P/E of 6.51. Over the last 12 months, ARW's Forward P/E has been as high as 4,441.88 and as low as 5.61, with a median of 8.16.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ARW has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.27.

Finally, investors will want to recognize that ARW has a P/CF ratio of 5.23. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.48. ARW's P/CF has been as high as 9.46 and as low as 4.95, with a median of 7.11, all within the past year.

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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Arrow Electronics, Inc. (ARW) - free report >>

Published in