Analyst Note| Brian Colello, CPA |
Narrow-moat Arrow Electronics reported impressive fourth-quarter results, as revenue and adjusted EPS exceeded our expectations and the high end of management’s guidance by a significant margin. This strength was spearheaded by growth in the firm’s global components business with particular strength seen in component sales in Asia. The firm’s enterprise computing solutions segment saw material growth in operating income as work- and learn-from-home trends persisted through the fourth quarter. Due to both the time value of money as we roll our valuation model, as well as better-than-expected near-term revenue growth, we are raising our fair value estimate for narrow-moat Arrow to $107 per share from $84 per share. With shares trading around $102, we believe investors can still capture some modest upside on this name.