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1. Company Snapshot

1.a. Company Description

Arrow Electronics, Inc.provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.The company operates in two segments, Global Components and Global Enterprise Computing Solutions.


The Global Components segment markets and distributes semiconductor products and related services; passive, electro-mechanical, and interconnect products, including capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products, as well as other products and services.The Global Enterprise Computing Solutions segment offers computing solutions, such as datacenter, cloud, security, and analytics solutions.This segment provides access to various services, including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training.


The company serves original equipment manufacturers, value-added resellers, managed service providers, contract manufacturers, and other commercial customers.Arrow Electronics, Inc.was founded in 1935 and is based in Centennial, Colorado.

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1.b. Last Insights on ARW

The recent performance of Arrow Electronics has been negatively impacted by leadership uncertainty. The sudden departure of Sean Kerins as President and CEO, effective immediately, and his replacement by William F. Austen as Interim President and CEO, may raise concerns about the company's strategic direction. Although the company reported strong Q2 earnings and revenue growth, exceeding guidance ranges, the leadership change may create short-term uncertainty. Additionally, while the extension of the distribution agreement with Molex and the addition of AirBorn to its product portfolio are positive developments, they may not offset concerns about leadership stability.

1.c. Company Highlights

2. Arrow Electronics Delivers Strong Q3 2025 Results, Exceeds EPS Expectations

Arrow Electronics reported revenue of $7.8 billion, above the midpoint of their guidance range, and non-GAAP diluted EPS of $2.41, surpassing the high end of their guided range and beating analyst estimates of $2.28. The company's global components sales increased by $610 million year-over-year to $5.6 billion, while global ECS sales rose by $300 million to $2.2 billion, driven by continued momentum in hybrid cloud infrastructure software, hardware, and services. Non-GAAP operating income was $217 million, or 2.8% of sales, with margins remaining flat sequentially due to regional and customer mix headwinds.

Publication Date: Nov -01

📋 Highlights
  • Revenue & EPS Outperformance: Q3 revenue $5.6B (components) and $2.2B (ECS), EPS $2.41 (above high guidance).
  • Non-GAAP Operating Income: $217M (2.8% of sales), stable margins despite mix headwinds.
  • Q4 Guidance: Sales $7.8B–$8.4B, EPS $3.44–$3.64, ECS growth up 13% YoY at midpoint.
  • ECS Momentum: $300M YoY sales increase, driven by hybrid cloud and AI-related data center demand.
  • Charge Impact: $21M write-off from underperforming contracts lowered EPS by $0.31, long-term margin accretion expected.

Segment Performance

The global components business saw a $610 million year-over-year increase in sales, with book-to-bill ratios remaining above parity in all three regions, indicating a modest cyclical upturn. In contrast, the global ECS segment experienced a 15% year-over-year increase in sales, driven by strong demand for cybersecurity, data protection, and data intelligence related to AI investment. The ECS business is expected to continue its strong performance, with sales projected to be between $2.7 billion and $2.9 billion in Q4 2025.

Guidance and Outlook

For Q4 2025, Arrow Electronics expects revenue to be between $7.8 billion and $8.4 billion, representing an 11% year-over-year increase at the midpoint. Non-GAAP diluted EPS is expected to be between $3.44 and $3.64. The company is also forecasting a tax rate of 23% to 25% and interest expense of approximately $60 million. Analysts estimate revenue growth of 5.2% for the next year, indicating a gradual recovery in the global components business and strong secular trends in cloud and AI.

Valuation and Return Metrics

With a P/E Ratio of 12.12 and an EV/EBITDA of 11.42, the market appears to be pricing in moderate growth expectations. Return metrics such as ROIC (5.74%) and ROE (7.79%) indicate a relatively stable profitability profile. The Net Debt / EBITDA ratio of 3.85 suggests a manageable debt burden. As the company continues to invest in value-added services and navigate the recovery in its global components business, its valuation and return metrics will be closely watched by investors.

3. NewsRoom

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Arrow Electronics, Inc. (ARW) Presents at UBS Global Technology and AI Conference 2025 Prepared Remarks Transcript

Dec -02

Source: seekingalpha.com

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American Century Companies Inc. Acquires 46,216 Shares of Arrow Electronics, Inc. $ARW

Dec -01

Source: defenseworld.net

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Creative Planning Boosts Position in Arrow Electronics, Inc. $ARW

Nov -26

Source: defenseworld.net

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Arrow Electronics, Inc. (ARW) Presents at Wells Fargo's 9th Annual TMT Summit Transcript

Nov -19

Source: seekingalpha.com

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Arrow Electronics to Present at Upcoming Investor Conferences

Nov -12

Source: businesswire.com

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Arrow Electronics Recognized as 2025 Microsoft Distribution Partner of the Year

Nov -12

Source: businesswire.com

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Bessemer Group Inc. Cuts Stock Holdings in Arrow Electronics, Inc. $ARW

Nov -03

Source: defenseworld.net

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Arrow Electronics, Inc. (ARW) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.54%)

6. Segments

Global Components

Expected Growth: 5%

Arrow Electronics' Global Components segment growth is driven by increasing demand for IoT devices, rising adoption of cloud computing, and growing need for electronic components in automotive and industrial applications. Additionally, the company's strategic acquisitions and expanded distribution agreements have enhanced its product offerings and geographic reach, contributing to its 5% growth.

Global Enterprise Computing Solutions

Expected Growth: 3%

Arrow Electronics' Global Enterprise Computing Solutions segment growth is driven by increasing demand for cloud-based services, digital transformation, and cybersecurity solutions. Additionally, the rise of IoT, AI, and 5G technologies fuels growth in edge computing, data analytics, and storage. Furthermore, the need for efficient IT infrastructure and cost optimization also contributes to the segment's growth.

7. Detailed Products

Electronic Components

Arrow Electronics offers a wide range of electronic components from leading manufacturers, including semiconductors, passives, electromechanical components, and connectors.

Enterprise Computing Solutions

Arrow Electronics provides enterprise computing solutions, including data center infrastructure, cloud services, and cybersecurity solutions.

Internet of Things (IoT) Solutions

Arrow Electronics offers IoT solutions, including hardware, software, and services for IoT device design, development, and deployment.

Cloud and Hybrid IT Solutions

Arrow Electronics provides cloud and hybrid IT solutions, including cloud migration, management, and security services.

Cybersecurity Solutions

Arrow Electronics offers cybersecurity solutions, including threat detection, incident response, and security consulting services.

Data Analytics and Artificial Intelligence (AI) Solutions

Arrow Electronics provides data analytics and AI solutions, including data management, analytics, and machine learning services.

Supply Chain and Logistics Services

Arrow Electronics offers supply chain and logistics services, including inventory management, shipping, and warehousing.

8. Arrow Electronics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Arrow Electronics, Inc. is medium due to the presence of alternative electronic components and services offered by competitors.

Bargaining Power Of Customers

The bargaining power of customers for Arrow Electronics, Inc. is low due to the company's diverse customer base and lack of concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Arrow Electronics, Inc. is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Arrow Electronics, Inc. is low due to the high barriers to entry in the electronic components industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Arrow Electronics, Inc. is high due to the presence of several established competitors in the electronic components industry, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 39.61%
Debt Cost 10.89%
Equity Weight 60.39%
Equity Cost 10.89%
WACC 10.89%
Leverage 65.58%

11. Quality Control: Arrow Electronics, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Value: 3.0

Growth: 8.8

Quality: 9.0

Yield: 3.0

Momentum: 10.0

Volatility: 6.0

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A-Score: 5.7/10

Value: 6.0

Growth: 5.6

Quality: 4.4

Yield: 2.0

Momentum: 8.5

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Avnet

A-Score: 5.6/10

Value: 6.9

Growth: 5.2

Quality: 3.2

Yield: 6.0

Momentum: 4.0

Volatility: 8.0

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A-Score: 5.1/10

Value: 5.5

Growth: 5.8

Quality: 5.9

Yield: 2.0

Momentum: 2.5

Volatility: 8.7

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Arrow Electronics

A-Score: 4.8/10

Value: 7.2

Growth: 6.6

Quality: 4.2

Yield: 0.0

Momentum: 3.5

Volatility: 7.7

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A-Score: 3.8/10

Value: 5.3

Growth: 7.0

Quality: 3.7

Yield: 0.0

Momentum: 0.5

Volatility: 6.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

112.48$

Current Price

112.48$

Potential

-0.00%

Expected Cash-Flows