Taking everything into account, ARW scores 4 out of 10 in our fundamental rating. ARW was compared to 123 industry peers in the Electronic Equipment, Instruments & Components industry. Both the profitability and the financial health of ARW get a neutral evaluation. Nothing too spectacular is happening here. ARW has a correct valuation and a medium growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year ARW was profitable.
ARW had a positive operating cash flow in the past year.
In the past 5 years ARW has always been profitable.
ARW had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

ARW has a Return On Assets (1.94%) which is comparable to the rest of the industry.
ARW has a better Return On Equity (7.43%) than 65.04% of its industry peers.
ARW's Return On Invested Capital of 6.43% is fine compared to the rest of the industry. ARW outperforms 66.67% of its industry peers.
ARW had an Average Return On Invested Capital over the past 3 years of 12.62%. This is above the industry average of 8.87%.
The last Return On Invested Capital (6.43%) for ARW is well below the 3 year average (12.62%), which needs to be investigated, but indicates that ARW had better years and this may not be a problem.

		Industry Rank	Sector Rank
ROA	1.94%
ROE	7.43%
ROIC	6.43%

ROA(3y)4.17%

ROA(5y)4.32%

ROE(3y)16.03%

ROE(5y)16.11%

ROIC(3y)12.62%

ROIC(5y)12.42%

1.3 Margins

ARW has a Profit Margin (1.62%) which is in line with its industry peers.
In the last couple of years the Profit Margin of ARW has declined.
ARW has a Operating Margin (2.79%) which is comparable to the rest of the industry.
ARW's Operating Margin has been stable in the last couple of years.
With a Gross Margin value of 11.10%, ARW is not doing good in the industry: 78.05% of the companies in the same industry are doing better.
ARW's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	2.79%
PM (TTM)	1.62%
GM	11.1%

OM growth 3Y-10.54%

OM growth 5Y0.58%

PM growth 3Y-24.12%

PM growth 5YN/A

GM growth 3Y-1.1%

GM growth 5Y0.67%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so ARW is still creating some value.
Compared to 1 year ago, ARW has less shares outstanding
Compared to 5 years ago, ARW has less shares outstanding
Compared to 1 year ago, ARW has an improved debt to assets ratio.

2.2 Solvency

ARW has an Altman-Z score of 2.20. This is not the best score and indicates that ARW is in the grey zone with still only limited risk for bankruptcy at the moment.
The Altman-Z score of ARW (2.20) is worse than 66.67% of its industry peers.
ARW has a debt to FCF ratio of 33.32. This is a negative value and a sign of low solvency as ARW would need 33.32 years to pay back of all of its debts.
ARW has a Debt to FCF ratio of 33.32. This is comparable to the rest of the industry: ARW outperforms 50.41% of its industry peers.
ARW has a Debt/Equity ratio of 0.49. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.49, ARW is not doing good in the industry: 68.29% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Debt/Equity	0.49
Debt/FCF	33.32
Altman-Z	2.2

ROIC/WACC0.55

WACC11.71%

2.3 Liquidity

A Current Ratio of 1.46 indicates that ARW should not have too much problems paying its short term obligations.
ARW's Current ratio of 1.46 is on the low side compared to the rest of the industry. ARW is outperformed by 76.42% of its industry peers.
ARW has a Quick Ratio of 1.14. This is a normal value and indicates that ARW is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.14, ARW is doing worse than 72.36% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	1.46
Quick Ratio	1.14

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

ARW shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -14.65%.
Measured over the past 5 years, ARW shows a small growth in Earnings Per Share. The EPS has been growing by 6.45% on average per year.
Looking at the last year, ARW shows a small growth in Revenue. The Revenue has grown by 3.16% in the last year.
The Revenue has been decreasing by -0.70% on average over the past years.

EPS 1Y (TTM)-14.65%

EPS 3Y-13.05%

EPS 5Y6.45%

EPS Q2Q%1.26%

Revenue 1Y (TTM)3.16%

Revenue growth 3Y-6.79%

Revenue growth 5Y-0.7%

Sales Q2Q%13.03%

3.2 Future

The Earnings Per Share is expected to grow by 11.01% on average over the next years. This is quite good.
ARW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.45% yearly.

EPS Next Y0.61%

EPS Next 2Y7.91%

EPS Next 3Y10.88%

EPS Next 5Y11.01%

Revenue Next Year9.27%

Revenue Next 2Y6.75%

Revenue Next 3Y6.26%

Revenue Next 5Y5.45%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 12.14, ARW is valued correctly.
Based on the Price/Earnings ratio, ARW is valued cheaper than 90.24% of the companies in the same industry.
ARW is valuated cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 9.77, the valuation of ARW can be described as very reasonable.
Based on the Price/Forward Earnings ratio, ARW is valued cheaper than 94.31% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.98. ARW is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	12.14
Fwd PE	9.77

4.2 Price Multiples

ARW's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ARW is cheaper than 91.06% of the companies in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as ARW.

		Industry Rank	Sector Rank
P/FCF	63.97
EV/EBITDA	9.26

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.

PEG (NY)20.04

PEG (5Y)1.88

EPS Next 2Y7.91%

EPS Next 3Y10.88%

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5. Dividend

5.1 Amount

No dividends for ARW!.

		Industry Rank	Sector Rank
Dividend Yield	0%

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ARROW ELECTRONICS INC / ARW FAQ

What is the fundamental rating for ARW stock?

ChartMill assigns a fundamental rating of 4 / 10 to ARW.

What is the valuation status for ARW stock?

ChartMill assigns a valuation rating of 5 / 10 to ARROW ELECTRONICS INC (ARW). This can be considered as Fairly Valued.

Can you provide the profitability details for ARROW ELECTRONICS INC?

ARROW ELECTRONICS INC (ARW) has a profitability rating of 5 / 10.

Can you provide the PE and PB ratios for ARW stock?

The Price/Earnings (PE) ratio for ARROW ELECTRONICS INC (ARW) is 12.14 and the Price/Book (PB) ratio is 0.94.