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Arrow Electronics Inc ARW

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Morningstar’s Analysis

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Arrow’s Best-in-Class Efficiency Allowing it to Profit From Tight Supply; FVE up to $125

Analyst Note

| William Kerwin |

We’re modestly raising our fair value estimate for narrow-moat Arrow Electronics to $125 per share, from $120 per share after strong third-quarter results and fourth-quarter guidance. Profitability in the quarter crushed our above-consensus expectations, and we now think the current positive business environment for Arrow will continue through 2022. Long-term, we expect Arrow to be prone to cyclicality in the semiconductor market past the current upcycle, but we continue to view it as the premier global electronics distributor, based on unparalleled cash conversion and profitability that will allow it to weather market cycles better than competitors. We think shares are fairly valued.

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Company Profile

Business Description

Arrow Electronics is a global distributor of electronics, connecting suppliers of semiconductors, components, and IT solutions to more than 180,000 small and midsize customers in 85 countries. Arrow is the second- largest semiconductor distributor in the world, and the largest for North American chip distribution, partnering with a third of global chipmakers.

9201 East Dry Creek Road
Centennial, CO, 80112
T +1 303 824-4000
Sector Technology
Industry Electronics & Computer Distribution
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 19,600