Arrow Electronics (ARW) analysts continue to raise estimates as the company signs new deals and grows through acquisition. The Zacks Rank #1 is expected to see earnings rise more that 50% this year alone.
Company Description
Arrow Electronics makes and services industrial and commercial electronic components. The company also works with enterprise computing solutions. Arrow Electronics works with more than 900 suppliers and upwards of 100,000 OEMs across 51 countries.
Upward Revisions
Arrow Electronics announced that it will report quarterly results on May 10. As a company heads into an earnings report, I like to see upward estimate revisions and Arrow is a great example.
In the past month we received 5 upward estimate revisions for the current quarter and 9 for the full year. The Zacks Consensus Estimate for the quarter is currently, 59 cents which is 65% higher than the same quarter one year ago.
Projections for this year are averaging $2.63, good enough for a 57% growth rate. After 9 analysts raised estimates for 2011 the consensus for Arrow Electronics is up to $3.02, a 15% earnings growth.
Good Value
Even with estimates climbing and growth rates well into the double digits, Arrow Electronics is still trading will attractive valuations. Shares are exchanging hands at just under 12 times forward earnings.
Arrow’s price to sales is only 0.25 times and its growth is reasonable priced, with a PEG ratio of 1.0. The price to book ratio is 1.28 while its peers are averaging 1.52.
New Deals
On Apr 8 Arrow Electronics announced a distribution agreement for NETGEAR, a networking, storage and IT security company. This is just one of several deals in the past few weeks.
Arrow Electronics is also increasing its exposure through acquisitions. On Apr 6 the company completed a deal to buy Converge and Verical, inc. The deals are expected to add 5 to 10 cents to Arrows bottom line.
The Chart
Shares of ARW recently pushed through a resistance point and continue to trend higher. Shares retested that level on the markets weakness a few sessions ago, but have maintained this new trading level. Look for the previous roadblock to act as support moving forward.
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service Zacks Investment Research
