Arrow Electronics
ARW
$203.51
-8.45%
Arrow Electronics, Inc. is a global provider of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions, operating through two primary segments: Global Components and Global Enterprise Computing Solutions (ECS). As one of the world's largest technology distributors, Arrow holds a distinct competitive position with an extensive portfolio of offerings from leading suppliers, enabling customers to reduce time-to-market and enhance competitiveness. The current investor narrative centers on a remarkable earnings recovery and growth acceleration, driven by robust demand in electronic components and enterprise solutions, as evidenced by a 39% year-over-year revenue surge in the latest quarter. This momentum has propelled the stock to a 52-week high, with market attention focused on the sustainability of this growth cycle and the company's ability to convert it into sustained profitability.…
ARW
Arrow Electronics
$203.51
Investment Opinion: Should I buy ARW Today?
Based on the analysis, Arrow Electronics is rated a Buy, as the stock offers a compelling risk/reward with a trailing PE of 9.99x and forward PE of 10.37x, well below the market average. The 39% revenue growth and 199% EPS growth in Q1 2026 demonstrate strong momentum, and the average analyst target of $222 implies modest upside, but the high target of $260 suggests potential for 17% gains. The stock's low PS ratio of 0.185x and EV/EBITDA of 7.93x further support undervaluation relative to growth.
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ARW 12-Month Price Forecast
The AI assessment is bullish with medium confidence, as Arrow's valuation is attractive relative to its growth, but the cyclical nature of the business introduces uncertainty. The stock's low PE and high growth rate suggest upside potential, but the sustainability of the cycle is key. If revenue growth remains above 20% and margins improve, the stock could re-rate higher; if growth decelerates, the stock could face downside. Monitoring quarterly earnings and industry indicators will be crucial.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Arrow Electronics's 12-month outlook, with a consensus price target around $235.00 and implied upside of +15.5% versus the current price.
Average Target
$235.00
0 analysts
Implied Upside
+15.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$200 - $250
Analyst target range
The wide target spread of $85 (from $175 to $260) highlights divergent views on Arrow's future prospects. The high target of $260 likely assumes continued strong demand for electronic components and successful margin expansion, while the low target of $175 may price in a potential cyclical downturn or competitive pressures. Recent institutional ratings show Truist Securities upgrading from Hold to Buy in April 2026, while B of A Securities upgraded from Underperform to Neutral in May 2026, and Wells Fargo maintains an Underweight rating. This mixed sentiment, with a slight bullish tilt from recent upgrades, suggests that while some analysts see value, others remain cautious about the sustainability of the current growth cycle.
Bulls vs Bears: ARW Investment Factors
Arrow Electronics presents a compelling bull case with explosive revenue growth, cheap earnings multiples, and strong momentum, but the bear case highlights cyclical risks, thin margins, and mixed analyst sentiment. Currently, the bull case has stronger evidence given the 39% revenue growth and low PE, but the sustainability of this growth cycle is the key tension. If the semiconductor cycle continues, the stock could re-rate higher; if demand normalizes, the stock could face significant downside. The most important factor to watch is whether revenue growth can remain above 20% and whether margins can expand, as this would validate the current valuation and drive further upside.
Bullish
- Revenue growth accelerating sharply: Q1 2026 revenue surged 39.0% YoY to $9.47B, up from $6.81B in Q1 2025, with sequential acceleration from $7.58B in Q2 2025 to $8.75B in Q4 2025. This demonstrates strong cyclical recovery and broad-based demand across both components and enterprise segments.
- Undervalued on earnings and sales: Trailing PE is 9.99x and forward PE is 10.37x, well below the market average, while PS ratio is just 0.185x. EV/EBITDA of 7.93x and PEG of 0.20x suggest the stock is cheap relative to its growth prospects, offering a margin of safety.
- Strong earnings recovery and profitability: EPS jumped from $1.53 in Q1 2025 to $4.58 in Q1 2026, a 199% increase, with net margin improving from 1.17% to 2.48%. ROE stands at 8.68% and operating margin at 3.04%, indicating improving operational efficiency.
- Positive analyst upgrades and targets: Truist upgraded to Buy in April 2026 and BofA upgraded to Neutral in May 2026, reflecting growing confidence. The average analyst target of $222 is near the current price, but the high target of $260 implies 17% upside, and the low target of $175 provides a floor.
Bearish
- Cyclicality of semiconductor distribution: Arrow's revenue is highly cyclical, tied to the semiconductor and electronics industry. The 39% growth in Q1 2026 may be unsustainable as the industry could face inventory corrections or demand normalization, as seen in past cycles.
- Thin gross margins and high competition: Gross margin is only 11.2%, reflecting the low-margin nature of distribution. Intense competition from peers like Avnet and WPG Holdings could pressure margins further, limiting profitability gains.
- Mixed analyst sentiment and low coverage: Only 4 analysts cover the stock, and Wells Fargo maintains an Underweight rating. The wide target spread ($85) indicates high uncertainty about future performance, and the average target of $222 offers only 0.1% upside from the current price.
- High valuation on cash flow: P/CF is 89.1x, extremely high, suggesting the market is paying a premium for cash flow. Free cash flow of $377.6M TTM is low relative to market cap, indicating potential cash flow volatility or heavy working capital needs.
ARW Technical Analysis
Arrow Electronics is in a powerful uptrend, with the stock price at $222.29 as of August 6, 2026, reflecting a 91.3% gain over the past year. The current price sits at 93.6% of its 52-week range (between $101.79 low and $237.33 high), indicating the stock is trading near its highs, which typically signals strong momentum but also potential overextension. The 6-month price change of 40.2% further confirms the sustained bullish trend, with the stock consistently making higher highs and higher lows.
Beta
1.20
1.20x market volatility
Max Drawdown
-23.5%
Largest decline past year
52-Week Range
$102-$237
Price range past year
Annual Return
+71.7%
Cumulative gain past year
| Period | ARW Return | S&P 500 |
|---|---|---|
| 1m | +2.5% | +2.4% |
| 3m | +4.4% | +4.6% |
| 6m | +28.3% | +11.7% |
| 1y | +71.7% | +21.4% |
| ytd | +80.0% | +13.4% |
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ARW Fundamental Analysis
Arrow's revenue trajectory has accelerated dramatically, with the most recent quarter (Q1 2026) reporting revenue of $9.47 billion, a 39.0% year-over-year increase. This follows a sequential progression from $6.81 billion in Q1 2025, $7.58 billion in Q2 2025, $7.71 billion in Q3 2025, and $8.75 billion in Q4 2025, demonstrating a clear acceleration in growth. The Global Components segment drove the bulk of revenue at $6.64 billion, while Global ECS contributed $2.83 billion, indicating broad-based strength across both business lines. This growth is a significant turnaround from the stagnant or declining revenue seen in 2024, positioning Arrow for a strong cyclical recovery.
Quarterly Revenue
$9.5B
2026-04
Revenue YoY Growth
+39.0%
YoY Comparison
Gross Margin
11.1%
Latest Quarter
Free Cash Flow
$377612000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ARW Overvalued?
Given Arrow's positive net income, the PE ratio is the primary valuation metric. The trailing PE stands at 9.99x, while the forward PE is 10.37x, indicating that the market expects earnings to remain relatively stable, with a slight premium for future growth. The gap between trailing and forward PE is minimal, suggesting that analysts anticipate modest earnings growth, which is consistent with the company's recent performance but may not fully reflect the acceleration in revenue growth.
PE
10.0x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 4x~21x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
7.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include Arrow's high debt-to-equity ratio of 0.47, which, while manageable, could strain cash flow if interest rates rise. The company's thin gross margin of 11.2% leaves little room for error, and any cost inflation or pricing pressure could compress operating margins, which are already only 3.0%. Additionally, free cash flow of $377.6M TTM is low relative to net income, suggesting high working capital requirements that could limit financial flexibility. The payout ratio is 0%, so no dividend cushion exists for income-focused investors.
FAQ
The key risks include: 1) Cyclicality of the semiconductor industry, which could lead to sharp revenue declines if demand weakens. 2) Thin gross margins of 11.2%, leaving little room for error. 3) High debt-to-equity of 0.47, which could strain cash flow if interest rates rise. 4) Mixed analyst sentiment, with Wells Fargo underweight and a wide target range. The most severe risk is a cyclical downturn, which could push the stock down to the 52-week low of $101.79, a 54% drop from current levels.
The 12-month forecast is moderately bullish. The base case (50% probability) sees the stock trading around $210-$230, near the average analyst target of $222. The bull case (30% probability) targets $240-$260, driven by sustained growth and margin expansion. The bear case (20% probability) sees the stock falling to $175-$190 if the cycle turns. The most likely scenario is the base case, assuming revenue growth moderates but remains positive. Key indicators to watch are quarterly revenue growth and gross margin trends.
ARW appears undervalued based on traditional metrics. The trailing PE of 9.99x and forward PE of 10.37x are significantly below the market average of ~20x. The PS ratio of 0.185x and EV/EBITDA of 7.93x also indicate a discount to peers. The PEG ratio of 0.20x suggests the stock is cheap relative to its growth rate. However, the high P/CF of 89.1x indicates the market is paying a premium for cash flow, which could be a concern. Overall, the valuation implies the market is pricing in modest growth, but the recent acceleration suggests potential upside.
ARW is a good buy for investors seeking exposure to the semiconductor cycle with a value tilt. The stock trades at a trailing PE of 9.99x, well below the market average, and has delivered 39% revenue growth in the latest quarter. The average analyst target of $222 is near the current price, but the high target of $260 implies 17% upside. However, the stock is cyclical and could face significant downside if the cycle turns, so it is best suited for investors with a 1-2 year horizon and tolerance for volatility.
ARW is more suitable for short-to-medium-term investment (1-2 years) due to its cyclical nature. The stock's beta of 1.2 indicates higher volatility, and the current growth cycle may not persist long-term. For long-term investors, the low valuation and potential for secular growth in electronics could offer value, but the cyclicality makes it risky. A minimum holding period of 12 months is recommended to ride out potential volatility and capture the expected upside from the current cycle.