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Arrow Electronics (ARW - Free Report) reported impressive third-quarter 2022 results. The company’s adjusted earnings of $5.45 per share beat the Zacks Consensus Estimate of $5.36. The bottom line improved 34.9% on a year-over-year basis.
In the third quarter of 2022, the company reported revenues of $9.27 billion, up 9% from the year-ago quarter. Excluding the impacts of unfavorable currency exchange rates, sales increased 14%. The top line surpassed the Zacks Consensus Estimate by 0.8%.
Arrow Electronics has been witnessing increasing demand for electronic components, and software, cloud and security solutions. Meanwhile, supply-chain constraints continue to limit its ability to capitalize on the growing demand.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Adjusted revenues from Global Components increased 10% year over year to $7.30 billion. Region-wise, the segment’s revenues from America and Europe jumped 21% year over year, each. Global Components’ sales in the Asia Pacific region were down 3% on a year-over-year basis.
Adjusted revenues from Global Enterprise Computing Solutions (“ECS”) were $1.97 billion, up 4% year over year. Region-wise, the segment’s revenues from America and Europe increased 3% and 7%, respectively.
The non-GAAP operating income from Global Components and Global ECS were $501 million and $86 million, respectively.
Margins
Arrow Electronics’ non-GAAP gross profit climbed 21% to $3.63 billion in the third quarter from the prior-year quarter’s $3 billion. The non-GAAP gross margin expanded 130 basis points (bps) year over year to 13.1%.
Non-GAAP operating income jumped 46.3% to $1.58 billion in the third quarter of 2022 from the year-ago quarter’s $1.08 billion. Non-GAAP operating margin grew 150 bps to 5.7%.
Balance Sheet and Cash Flow
Arrow Electronics exited the third quarter with cash and cash equivalents of $334 million compared with the previous quarter’s $225.5 million.
The long-term debt was $3.19 billion, higher than $2.86 billion at the end of the second quarter of 2022.
The New York-based electronic components distributor generated $141.1 million in cash from operating activities in the reported quarter. In the first nine months of 2022, the company utilized $141.8 million of operating cash flow.
In the third quarter of 2022, ARW returned $259 million worth of shares to its shareholders through its stock-repurchase program. It has $629 million remaining under its current share-repurchase authorization.
Guidance
For the fourth quarter of 2022, sales are estimated between $8.95 billion and $9.55 billion.
Global Components sales are projected to be $6.80-$7.10 billion. Global ECS sales are anticipated between $2.15 billion and $2.45 billion.
Interest expenses will presumably be $62 million. As a result, the company projects non-GAAP earnings per share of $5.60-$5.80.
Arrow Electronics expects changes in foreign currencies to decrease fourth-quarter sales by $420 million and earnings per share by 25 cents.
Zacks Rank & Key Picks
Arrow Electronics currently carries a Zacks Rank #3 (Hold). Shares of ARW have lost 14.9% in the past year.
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved north by 15 cents to $1.18 per share in the past 60 days.
ZS' earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 28.6%. Shares of the company have declined 60% in the past year.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has been increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved up 16 cents to $1.86 per share in the past 30 days.
Celestica's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 11.8%. Shares of the company have lost 1.1% in the past year.
The Zacks Consensus Estimate for Okta's third-quarter fiscal 2023 loss has been revised 3 cents northward to 24 cents per share over the past 90 days. For fiscal 2022, loss estimates have improved by 3 cents to 72 cents per share in the past 60 days.
OKTA’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 45.5%. Shares of the company have declined 80.4% in the past year.
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Arrow Electronics (ARW) Q3 Earnings & Revenues Beat, Rise Y/Y
Arrow Electronics (ARW - Free Report) reported impressive third-quarter 2022 results. The company’s adjusted earnings of $5.45 per share beat the Zacks Consensus Estimate of $5.36. The bottom line improved 34.9% on a year-over-year basis.
In the third quarter of 2022, the company reported revenues of $9.27 billion, up 9% from the year-ago quarter. Excluding the impacts of unfavorable currency exchange rates, sales increased 14%. The top line surpassed the Zacks Consensus Estimate by 0.8%.
Arrow Electronics has been witnessing increasing demand for electronic components, and software, cloud and security solutions. Meanwhile, supply-chain constraints continue to limit its ability to capitalize on the growing demand.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote
Segmental Details
Adjusted revenues from Global Components increased 10% year over year to $7.30 billion. Region-wise, the segment’s revenues from America and Europe jumped 21% year over year, each. Global Components’ sales in the Asia Pacific region were down 3% on a year-over-year basis.
Adjusted revenues from Global Enterprise Computing Solutions (“ECS”) were $1.97 billion, up 4% year over year. Region-wise, the segment’s revenues from America and Europe increased 3% and 7%, respectively.
The non-GAAP operating income from Global Components and Global ECS were $501 million and $86 million, respectively.
Margins
Arrow Electronics’ non-GAAP gross profit climbed 21% to $3.63 billion in the third quarter from the prior-year quarter’s $3 billion. The non-GAAP gross margin expanded 130 basis points (bps) year over year to 13.1%.
Non-GAAP operating income jumped 46.3% to $1.58 billion in the third quarter of 2022 from the year-ago quarter’s $1.08 billion. Non-GAAP operating margin grew 150 bps to 5.7%.
Balance Sheet and Cash Flow
Arrow Electronics exited the third quarter with cash and cash equivalents of $334 million compared with the previous quarter’s $225.5 million.
The long-term debt was $3.19 billion, higher than $2.86 billion at the end of the second quarter of 2022.
The New York-based electronic components distributor generated $141.1 million in cash from operating activities in the reported quarter. In the first nine months of 2022, the company utilized $141.8 million of operating cash flow.
In the third quarter of 2022, ARW returned $259 million worth of shares to its shareholders through its stock-repurchase program. It has $629 million remaining under its current share-repurchase authorization.
Guidance
For the fourth quarter of 2022, sales are estimated between $8.95 billion and $9.55 billion.
Global Components sales are projected to be $6.80-$7.10 billion. Global ECS sales are anticipated between $2.15 billion and $2.45 billion.
Interest expenses will presumably be $62 million. As a result, the company projects non-GAAP earnings per share of $5.60-$5.80.
Arrow Electronics expects changes in foreign currencies to decrease fourth-quarter sales by $420 million and earnings per share by 25 cents.
Zacks Rank & Key Picks
Arrow Electronics currently carries a Zacks Rank #3 (Hold). Shares of ARW have lost 14.9% in the past year.
Some better-ranked stocks from the broader Computer and Technology sector are Zscaler (ZS - Free Report) , Celestica (CLS - Free Report) and Okta (OKTA - Free Report) . While Zscaler and Celestica currently flaunt a Zacks Rank #1 (Strong Buy), Okta carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved north by 15 cents to $1.18 per share in the past 60 days.
ZS' earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 28.6%. Shares of the company have declined 60% in the past year.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has been increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved up 16 cents to $1.86 per share in the past 30 days.
Celestica's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 11.8%. Shares of the company have lost 1.1% in the past year.
The Zacks Consensus Estimate for Okta's third-quarter fiscal 2023 loss has been revised 3 cents northward to 24 cents per share over the past 90 days. For fiscal 2022, loss estimates have improved by 3 cents to 72 cents per share in the past 60 days.
OKTA’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 45.5%. Shares of the company have declined 80.4% in the past year.