Arrow Electronics, Inc. (ARW) recently raised its fourth quarter guidance as its components business picked up. ARW has surprised on estimates the last four quarters by an average of 6.65%.
Company Description
Arrow Electronics provides products and services to industrial and commercial users of electronic components. It acts as a supply channel partner for 700 suppliers and about 140,000 original equipment manufacturers (OEMs), contract manufacturers and commercial customers.
Arrow Electronics has 300 locations in 50 countries.
Fourth Quarter Guidance Raised
The technology recovery appears to be in full-swing as Arrow Electronics raised its fourth quarter earnings per share guidance on Dec 21 to a range of 57 to 63 cents from its prior guidance of 44 to 56 cents.
The revenue range was also narrowed to $3.8 to $4.2 billion from $3.65 to $4.25 billion.
Arrow Electronics saw stronger than expected growth in the components business through late December.
Zacks Consensus Estimates Rise to Match the Guidance
The fourth quarter Zacks Consensus jumped to 61 cents from 52 cents after the company issued its earnings revision. This is on the high end of the company’s expected range.
The 2009 Zacks Consensus Estimate climbed 7 cents to $1.62 in the last month.
Analysts are equally bullish about 2010. They expect earnings to growth by 38.85% compared to 2009. The 2010 Zacks Consensus rose 12 cents to $2.25 per share in the last 30 days.
Arrow Electronics is expected to report fourth-quarter results on Feb 9.
Arrow Expands Its Reach in the Aerospace and Defense Markets
On Dec 21, Arrow Electronics also announced it had completed the acquisition of A.E. Petsche Company which provides interconnect products including specialty wire, cable and harness management solutions to the aerospace and defense markets.
A.E. Petsche had 250 employees and distributed products in the U.S., Canada, Mexico and in Europe.
The acquisition is expected to have an immediate impact on the bottom line in 2010. Arrow Electronics projects it to be accretive to Arrow’s 2010 earnings by 10 to 12 cents per share.
Value Fundamentals
Arrow Electronics is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 13.19 and a price-to-book ratio of just 1.25. Arrow Electronics also has a solid 5-year average return on equity (ROE) of 11.31%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
