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Arrow (ARW) to Report Q2 Earnings: A Beat in the Cards?

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We expect Arrow Electronics, Inc. (ARW - Free Report) to beat expectations when it reports second-quarter 2017 results on Aug 3.

Why a Likely Positive Surprise?

Our proven model shows that Arrow is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESPArrow’s Earnings ESP is +1.13%. This is because the company’s Most Accurate estimate is $1.79 per share while the Zacks Consensus Estimate is pegged lower at $1.77 per share. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Arrow currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) has a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Arrow’s Zacks Rank #2 and +1.13% ESP makes us reasonably optimistic of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arrow Electronics, Inc. Price and EPS Surprise


What is Driving Better-than-Expected Earnings?

We note that Arrow has outperformed the Zacks Consensus Estimate in two of the trailing four quarters with an average positive earnings surprise of 0.9%.

Recently, Arrow has teamed up with International Business Machines Corporation (IBM - Free Report) to deliver pioneering solutions to accelerate growth of Internet of Things (IoT) in Asia Pacific. The integration will enable the company to become a key player in the automotive and industrial IoT segments. Given the ever-increasing number of connected products making their way into our everyday lives, IoT is poised to grow strongly. This alliance provides it with some key capabilities to cater to this huge opportunity.

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.

Other Stocks to Consider

Here are some other companies you may consider as our proven model shows these too have the right combination of elements to post an earnings beat this quarter:

CA Inc. (CA - Free Report) , carries a Zacks Rank #3 and has an Earnings ESP of +4.00%.

Symantec Corporation (SYMC - Free Report) , with an Earnings ESP of +16.67%, carries a Zacks Rank #2.

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