Arrow Electronics Is Pointing Sideways

November 3, 2015 By Sophocles Sophocleous

Summary

Arrow is a global leader in tech distribution, trading at under 10x earnings.
Financial results indicate sideways performance at best with growth mostly coming from buybacks.
Despite cheapness the stock should be avoided based on FX headwinds, weak benefits from acquisitions, and cash flows that don’t justify a long.

Arrow Electronics (NYSE:ARW) is a global leader in the distribution of electronic components and computer solutions. This Fortune 200 company is a supply chain partner for 100,000+ OEMs, has a global network of 460+ locations in 56 countries and employs 16,500 employees worldwide. Along with Avnet (NYSE:AVT), these two companies have a 60% market share.

“Global Components” (semiconductors, passive, electromechanical, connector products, etc) is around 65% of sales while the remaining 35% is under “Enterprise Computing” (IT hardware/software). For a historical breakdown of sales by segment and region please see table below.

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fatalpha.com is not operated by a broker, a dealer, a registered investment adviser, or a regulated entity. Under no circumstances does any information posted represent a recommendation to buy or sell a security. In no event shall fatalpha.com, Sophocles Sophocleous, FATALPHA LTD, or any affiliates or associates be liable to any member or guest for any damages of any kind arising out of the use of any content available on the website. Past performance is a poor indicator of future performance. All the information on this site and any related materials is not intended to be, nor does it constitute investment advice or recommendations. All materials and information you obtain here are exclusively for informational purposes and does not constitute an offer or solicitation to provide any investment services to investors based in the U.S. or elsewhere.