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Arrow Electronics Inc ARW

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Arrow Hits Bullseye With a Record-Breaking Quarter; Raise FVE to $107; Shares Undervalued

Brian Colello, CPA Sector Director

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.

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Company Profile

Business Description

Arrow Electronics is a leading value-added distributor of semiconductors, electronic components, software, and enterprise infrastructure hardware. The company operates in two segments: global components, which includes the sale of semiconductors, and global enterprise computing solutions, which includes the sale of software, storage, and servers. Arrow primarily serves small to midsize electronic equipment manufacturers and value-added resellers.

9201 East Dry Creek Road
Centennial, CO, 80112
T +1 303 824-4000
Sector Technology
Industry Electronics & Computer Distribution
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 19,600