Arrow Electronics
ARW
$204.43
+0.25%
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 segments: Global Components and Global Enterprise Computing Solutions (ECS). As one of the world's largest technology distributors, Arrow holds a dominant market 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 the company's robust recovery from a cyclical downturn, with revenue growth reaccelerating sharply in recent quarters, driven by strength in both components and enterprise computing, while the stock has rallied strongly over the past year, reflecting optimism about sustained demand and margin expansion. However, recent price volatility and mixed analyst actions suggest ongoing debate about the durability of this growth and the impact of inventory normalization and macroeconomic conditions.…
ARW
Arrow Electronics
$204.43
Investment Opinion: Should I buy ARW Today?
Based on the analysis, ARW is rated a Buy. The company is experiencing a strong cyclical recovery, with Q1 2026 revenue up 39% YoY and EPS of $4.58, and the stock trades at a forward PE of 8.52x, which is attractive relative to its growth. The average analyst target of $235 implies 15% upside, and the low PE and PEG ratio suggest the market is undervaluing the earnings recovery.
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ARW 12-Month Price Forecast
The AI assessment is bullish on ARW, driven by the strong fundamental momentum and attractive valuation. The company's revenue growth is exceptional, and the low PE and PEG ratios suggest the market is not fully pricing in the earnings recovery. However, the medium confidence reflects the cyclical nature of the business and the recent price volatility. If the company can sustain growth above 20% and maintain margins, the stock is likely to re-rate higher. Conversely, any signs of deceleration or margin pressure would warrant a downgrade to neutral. Key factors to monitor include quarterly revenue growth, gross margin trends, and analyst revisions.
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 +14.9% versus the current price.
Average Target
$235.00
0 analysts
Implied Upside
+14.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$200 - $250
Analyst target range
The target range of $200 to $250, with an average of $235, indicates that analysts see potential for further gains but also acknowledge risks. The high target likely assumes continued strong demand for electronic components and enterprise computing, along with margin expansion and successful execution of growth strategies. The low target may price in a potential slowdown in the cyclical recovery, inventory corrections, or macroeconomic headwinds that could pressure revenue and margins. Recent institutional ratings show a mix of actions: Truist Securities upgraded from Hold to Buy in April 2026 and reaffirmed Buy in May and June, while B of A Securities upgraded from Underperform to Neutral in May 2026, and Wells Fargo has maintained an Underweight rating since February 2025. This pattern suggests that while some analysts are becoming more constructive, others remain cautious, contributing to the wide target spread and indicating that the stock's future trajectory is highly uncertain.
Bulls vs Bears: ARW Investment Factors
Arrow Electronics presents a compelling bull case driven by a sharp cyclical recovery, with Q1 2026 revenue up 39% YoY and margins expanding, all while trading at a single-digit PE and a PEG of 0.20. The stock has outperformed the market by 42 percentage points over the past year, and analyst targets suggest further upside. However, the bear case highlights the recent 14% pullback from highs, mixed analyst sentiment, and the inherent cyclicality and thin margins of the distribution business. The most critical tension is whether the current growth surge is sustainable or a temporary cyclical peak; if demand normalizes and growth decelerates, the low valuation could be a value trap. Currently, the evidence slightly favors the bulls given the strong fundamental momentum and undemanding valuation, but the stock's high beta and recent volatility warrant caution.
Bullish
- Revenue Growth Reaccelerating Sharply: Q1 2026 revenue surged 39.03% YoY to $9.47 billion, a dramatic acceleration from 13.4% growth in Q4 2025 and 12.4% in Q3 2025, signaling a robust cyclical upswing. This inflection from the early 2025 trough (Q1 2025 revenue down 6.5% YoY) demonstrates strong demand recovery across both components and enterprise computing segments.
- Undervalued on Earnings and Sales: The trailing PE of 9.99x and forward PE of 8.52x are well below the market average, while the PS ratio of 0.185x and EV/EBITDA of 7.93x indicate the stock trades at a significant discount to its growth prospects. With a PEG ratio of 0.20, the market is pricing in minimal growth despite the recent acceleration.
- Strong Relative Performance vs. Market: ARW has surged 60.79% over the past year versus the S&P 500's 18.56% gain, with relative strength of 42.23% over that period. This outperformance reflects improving fundamentals and investor recognition of the company's earnings recovery potential.
- Analyst Targets Imply Upside: The average analyst target of $235 represents 15.2% upside from the current price of $203.92, while the high target of $250 implies 22.6% upside. Even the low target of $200 is near the current price, suggesting limited downside risk according to sell-side estimates.
Bearish
- Recent Price Volatility and Pullback: After reaching a 52-week high of $237.33 in June 2026, the stock has pulled back to $203.92, a decline of 14.1% from the peak. The 1-month return is -0.50% and the 3-month return is -4.99%, indicating momentum has stalled and investors are reassessing the sustainability of the rally.
- Mixed Analyst Sentiment: While Truist upgraded to Buy, BofA only moved to Neutral, and Wells Fargo maintains an Underweight rating. This divergence among analysts, with only 4 covering the stock, suggests uncertainty about the durability of the recovery and the appropriate valuation.
- Thin Gross Margins: Gross margin is only 11.24%, reflecting the low-margin nature of distribution. This leaves little room for error; any cost inflation or pricing pressure could quickly erode profitability, as seen in the volatile operating margins over recent quarters.
- High Beta and Market Sensitivity: With a beta of 1.201, ARW is more volatile than the market, amplifying both upside and downside moves. In a market downturn, the stock could underperform, as evidenced by its -5.97% relative strength over the past month when the S&P 500 rose 5.47%.
ARW Technical Analysis
Arrow Electronics has exhibited a powerful uptrend over the past year, with the stock price surging 60.79% over the trailing twelve months, significantly outperforming the S&P 500's 18.56% gain. The current price of $203.92 sits at approximately 86% of its 52-week range (low of $101.79, high of $237.33), indicating that while the stock has pulled back from its highs, it remains in the upper portion of its range, suggesting a strong underlying trend with some recent consolidation. This positioning near the highs reflects robust momentum, though the recent pullback from the peak may signal a pause or potential distribution phase.
Beta
1.20
1.20x market volatility
Max Drawdown
-21.7%
Largest decline past year
52-Week Range
$102-$237
Price range past year
Annual Return
+61.8%
Cumulative gain past year
| Period | ARW Return | S&P 500 |
|---|---|---|
| 1m | -5.6% | +2.7% |
| 3m | -10.5% | +1.0% |
| 6m | +42.5% | +12.0% |
| 1y | +61.8% | +18.9% |
| ytd | +80.8% | +12.5% |
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ARW Fundamental Analysis
Arrow's revenue trajectory has turned sharply positive, with the most recent quarter (Q1 2026) reporting revenue of $9.47 billion, a 39.03% year-over-year increase, a significant acceleration from the prior quarter's 13.4% growth (Q4 2025: $8.75 billion) and the 12.4% growth in Q3 2025. This resurgence is driven by strength in both segments, with Global Components contributing $6.64 billion and Global ECS $2.83 billion in the latest quarter, reflecting broad-based demand recovery. The multi-quarter trend shows a clear inflection from the trough in early 2025 (Q1 2025 revenue was $6.81 billion, down 6.5% YoY) to robust double-digit growth, indicating a cyclical upswing that is likely to drive earnings momentum.
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 8.52x, indicating that the market expects earnings growth, which is consistent with the company's recent performance and analyst estimates. The gap between trailing and forward PE suggests a modestly optimistic outlook, with earnings expected to increase by approximately 17% over the next year, as reflected in the estimated EPS of $27.20 for the current fiscal year.
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
Financially, Arrow's debt-to-equity ratio of 0.47 is manageable, but the company's thin gross margin of 11.24% leaves little cushion for cost increases or pricing pressure. Operating margin improved to 4.20% in Q1 2026, but it has been volatile, ranging from 2.32% to 4.33% over the past year, indicating earnings sensitivity to revenue mix and operational efficiency. Free cash flow of $377.6 million TTM is positive but modest relative to the $10.9 billion market cap, and the payout ratio is zero, so shareholders rely solely on capital gains. The company's reliance on continued revenue growth to justify its valuation is a key risk; if growth decelerates, the stock could re-rate lower despite its low PE.