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Arrow (ARW) Tops Q1 Earnings, Revenue Estimates, Guides Well
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Arrow Electronics Inc. (ARW - Free Report) started 2017 on a strong note, by reporting strong results for the first quarter. The company’s quarterly revenues and earnings not only marked a year-over-year improvement, but also surpassed the respective Zacks Consensus Estimate. The figures also came above the mid-point of the company’s guidance ranges.
Arrow’s non-GAAP earnings of $1.46 per share beat the Zacks Consensus Estimate by a couple of cents and came above the mid-point of its guidance range of $1.37–$1.49 (mid-point $1.43 per share). Moreover, earnings increased from $1.43 per share reported in the year-ago quarter. On a GAAP basis, earnings came in at $1.26 compared with $1.14 reported a year ago.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow’s revenues, on a reported basis, were $5.760 billion, up 5.2% from the year-ago quarter. Quarterly revenues also surpassed the Zacks Consensus Estimate of $5.572 billion as well as came above the mid-point of the company’s guidance range of $5.375–$5.775 billion (mid-point $5.575 billion).
On a reported basis, revenues from Global components increased 10.4% to $5.059 billion. On an adjusted basis (excluding the impact of changes in foreign currencies and acquisitions), the figure grew 12%. Geographically, revenues from America and the Asia Pacific climbed 9% and 17%, respectively. Sales from Europe rose approximately 5.7% on a year-over-year basis.
Revenues at Global Enterprise Computing Solutions (ECS) came in at $1.701 billion, down 5.4% on a year-over-year basis. On an adjusted basis, revenues decreased 5.7%, primarily due to the impact of acquisition and foreign currency fluctuations. Revenues from the Americas were down 4.8% year over year, whereas revenues from Europe decreased 6.6%.
Gross margin contracted 50 basis points (bps) year over year and came in at 13.2%. Also, Arrow reported non-GAAP operating margin of 3.8%, down 10 bps. However, operating income in dollar terms, increased 2.4% year over year to $220.1 million.
The company’s non-GAAP net income was $132.4 million or $1.46 per share compared with $132.2 million or $1.43 per share last year.
Arrow exited the quarter with cash and cash equivalents of $521.6 million compared with $534.3 million at the end of fourth-quarter 2016. Long-term debt (including current portion) was $2.46 billion compared with $2.79 billion at the end of the previous quarter. During the quarter, the company had negative operating cash flow of $20.9 million. The company spent $68.8 million for share repurchases during the quarter.
Guidance
Buoyed by the splendid first-quarter performance, Arrow provided a strong revenue and earnings guidance for the second quarter which is well ahead of our expectations.
For the second quarter, sales are expected between $5.975 billion and $6.375 billion (mid-point $6.175 billion). The Zacks Consensus Estimate is pegged at $6.03 billion. Global components sales are projected in a range of $4.05–$4.25 billion. Global enterprise computing solutions sales are estimated to be in the range of $1.925–$2.125 billion.
The company projects non-GAAP earnings per share in a range of $1.70–$1.82 (mid-point $1.76 per share). The Zacks Consensus Estimate is pegged at $1.73, higher than the mid-point of the company guided range.
Our Take
An impressive first-quarter performance and optimistic guidance for the second quarter helped the stock to gain nearly 4.5% during yesterday’s trade. Notably, Arrow’s share price movement has been much impressive since the beginning of this year. Year to date, the company’s shares have gained 5.8%, while the Zacks categorized Electronics Parts Distribution industry incurred a loss of 8.5% during the same time frame.
Original equipment manufacturers, contract manufacturers and commercial customers are selecting Arrow’s distribution channels for marketing their products. The company’s core strength in providing best-in-class services and easy-to-acquire technologies are anticipated to prove conducive to growth in the quarters ahead.
Meanwhile, incremental sales from strategic acquisitions, such as Computerlinks, are anticipated to boost the top line. However, uncertain economic conditions, a high debt burden and competition from the likes of Avnet (AVT - Free Report) remain concerns.
Currently, Arrow has a Zacks Rank #2 (Buy).
Some other similarly-ranked stocks in the Electronics Parts Distribution industry are Anixter International Inc. and WESCO International, Inc. (WCC - Free Report) .
The long-term expected EPS growth rate for Anixter International and WESCO International are 10% and 11.7%, respectively.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
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Arrow (ARW) Tops Q1 Earnings, Revenue Estimates, Guides Well
Arrow Electronics Inc. (ARW - Free Report) started 2017 on a strong note, by reporting strong results for the first quarter. The company’s quarterly revenues and earnings not only marked a year-over-year improvement, but also surpassed the respective Zacks Consensus Estimate. The figures also came above the mid-point of the company’s guidance ranges.
Arrow’s non-GAAP earnings of $1.46 per share beat the Zacks Consensus Estimate by a couple of cents and came above the mid-point of its guidance range of $1.37–$1.49 (mid-point $1.43 per share). Moreover, earnings increased from $1.43 per share reported in the year-ago quarter. On a GAAP basis, earnings came in at $1.26 compared with $1.14 reported a year ago.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. Price, Consensus and EPS Surprise | Arrow Electronics, Inc. Quote
Quarter Detail
Arrow’s revenues, on a reported basis, were $5.760 billion, up 5.2% from the year-ago quarter. Quarterly revenues also surpassed the Zacks Consensus Estimate of $5.572 billion as well as came above the mid-point of the company’s guidance range of $5.375–$5.775 billion (mid-point $5.575 billion).
On a reported basis, revenues from Global components increased 10.4% to $5.059 billion. On an adjusted basis (excluding the impact of changes in foreign currencies and acquisitions), the figure grew 12%. Geographically, revenues from America and the Asia Pacific climbed 9% and 17%, respectively. Sales from Europe rose approximately 5.7% on a year-over-year basis.
Revenues at Global Enterprise Computing Solutions (ECS) came in at $1.701 billion, down 5.4% on a year-over-year basis. On an adjusted basis, revenues decreased 5.7%, primarily due to the impact of acquisition and foreign currency fluctuations. Revenues from the Americas were down 4.8% year over year, whereas revenues from Europe decreased 6.6%.
Gross margin contracted 50 basis points (bps) year over year and came in at 13.2%. Also, Arrow reported non-GAAP operating margin of 3.8%, down 10 bps. However, operating income in dollar terms, increased 2.4% year over year to $220.1 million.
The company’s non-GAAP net income was $132.4 million or $1.46 per share compared with $132.2 million or $1.43 per share last year.
Arrow exited the quarter with cash and cash equivalents of $521.6 million compared with $534.3 million at the end of fourth-quarter 2016. Long-term debt (including current portion) was $2.46 billion compared with $2.79 billion at the end of the previous quarter. During the quarter, the company had negative operating cash flow of $20.9 million. The company spent $68.8 million for share repurchases during the quarter.
Guidance
Buoyed by the splendid first-quarter performance, Arrow provided a strong revenue and earnings guidance for the second quarter which is well ahead of our expectations.
For the second quarter, sales are expected between $5.975 billion and $6.375 billion (mid-point $6.175 billion). The Zacks Consensus Estimate is pegged at $6.03 billion. Global components sales are projected in a range of $4.05–$4.25 billion. Global enterprise computing solutions sales are estimated to be in the range of $1.925–$2.125 billion.
The company projects non-GAAP earnings per share in a range of $1.70–$1.82 (mid-point $1.76 per share). The Zacks Consensus Estimate is pegged at $1.73, higher than the mid-point of the company guided range.
Our Take
An impressive first-quarter performance and optimistic guidance for the second quarter helped the stock to gain nearly 4.5% during yesterday’s trade. Notably, Arrow’s share price movement has been much impressive since the beginning of this year. Year to date, the company’s shares have gained 5.8%, while the Zacks categorized Electronics Parts Distribution industry incurred a loss of 8.5% during the same time frame.
Original equipment manufacturers, contract manufacturers and commercial customers are selecting Arrow’s distribution channels for marketing their products. The company’s core strength in providing best-in-class services and easy-to-acquire technologies are anticipated to prove conducive to growth in the quarters ahead.
Meanwhile, incremental sales from strategic acquisitions, such as Computerlinks, are anticipated to boost the top line. However, uncertain economic conditions, a high debt burden and competition from the likes of Avnet (AVT - Free Report) remain concerns.
Currently, Arrow has a Zacks Rank #2 (Buy).
Some other similarly-ranked stocks in the Electronics Parts Distribution industry are Anixter International Inc. and WESCO International, Inc. (WCC - Free Report) .
The long-term expected EPS growth rate for Anixter International and WESCO International are 10% and 11.7%, respectively.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>