Arrow Electronics: Economic Slowdown Will Hurt But Stock Is Cheap

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Weighing Machine
2.93K Followers

Summary

  • Despite record results, shares of Arrow Electronics have declined 17% year-to-date as concerns about a semi slowdown weigh.
  • Though cyclical, over the long-term, Arrow has been a proven winner, compounding EPS at 12% over the past decade.
  • I estimate mid-cycle earnings for Arrow of $15.50 per share which implies Arrow is trading at just over 7x my 'normalized' EPS.
  • While shares may be volatile given macro-sensitivity, Arrow shares offer significant upside to long-term investors.
Main microchip on the motherboard

sankai

Arrow Electronics (NYSE:ARW) is a leading global value-added distributor of semiconductors and electronic components. Arrow benefits from economies of scale (purchasing over $25 billion of components, mainly semiconductors) and scope. The company sells tens of thousands of different products in over 90 different countries.

This article was written by

Weighing Machine profile picture
2.93K Followers
Former global buyside analyst/PM doing fundamental research for over a decade (2001-2012). Long term (5 year) time horizon when investing.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in ARW over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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