Arrow Electronics (ARW) Q2 Earnings Top Estimates, Sales Miss
Arrow Electronics ARW reported mixed second-quarter 2023 results. The company’s adjusted earnings of $4.37 per share beat the Zacks Consensus Estimate of $4.33. However, the bottom line declined 24.4% on a year-over-year basis due to lower revenues and unfavorable foreign currency exchange rates.
In the second quarter of 2023, ARW reported revenues of $8.51 billion, down 10% from the year-ago quarter. The top line missed the Zacks Consensus Estimate by 2% due to unfavorable foreign currency exchange rates.
With supply-chain constraints improving, the company continued to witness normalization in shortage market activities and was able to deliver an enhanced quarterly performance.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote
Second-Quarter Details
Adjusted revenues from Global Components decreased 10% year over year to $6.68 billion. Our model estimates for Global Components sales were pegged at $6.78 billion, indicating a 9.1% decline. Region-wise, the segment’s revenues from Europe jumped 19%, while sales from the Americas and Asia-Pacific regions plunged 17% and 22%, respectively.
Adjusted revenues from Global Enterprise Computing Solutions (ECS) were $1.83 billion, dropped 8% year over year. Our model estimates for Global ECS sales were pegged at $1.87 billion, suggesting a 6.6% year-over-year fall. Region-wise, the segment’s revenues from America and Europe declined 14% and 1%, respectively.
The non-GAAP operating income from Global Components and Global ECS was $388 million and $87 million, respectively.
Arrow Electronics’ non-GAAP operating income plunged 24.6% to $410.5 million in the second quarter of 2023 from the year-ago quarter’s $544.2 million. The non-GAAP operating margin shrunk 100 basis points to 4.8%.
Balance Sheet and Cash Flow
Arrow Electronics exited the second quarter with cash and cash equivalents of $240.4 million compared with the previous quarter’s $205.6 million.
The long-term debt was $3.67 billion, down from $3.72 billion at the end of the previous quarter.
The New York-based electronic component distributor used $126.8 million in cash from operating activities in the reported quarter. During the first half of 2023, the company’s cash from operating activities was $97 million.
In the second quarter of 2022, ARW returned $200 million to its shareholders through share repurchases. It has approximately $824 million remaining under its current share repurchase authorization.
Third-Quarter 2023 Guidance
For the third quarter of 2023, sales are estimated between $7.78 billion and $8.38 billion.
Global Components sales are projected in the band of $6.00-$6.40 billion. Global ECS sales are anticipated between $1.78 billion and $1.98 billion.
Interest expenses are expected in the range of $85-$90 million. As a result, the company projects non-GAAP earnings per share in the band of $3.40-$3.60.
Arrow Electronics expects changes in foreign currencies to increase third-quarter sales by $212 million and earnings per share by 11 cents on a quarter-over-quarter basis.
Zacks Rank & Stocks to Consider
Currently, Arrow Electronics carries a Zacks Rank #3 (Hold). Shares of ARW have gained 18.6% over the past year.
Some better-ranked stocks from the broader Computer and Technology sector are Salesforce CRM, NVIDIA Corporation NVDA and Meta Platforms META. While NVIDIA sports a Zacks Rank #1 (Strong Buy), Salesforce and Meta carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s second-quarter fiscal 2024 earnings has been steady at 92 cents per share over the past 90 days. For fiscal 2024, earnings estimates have moved up by 13 cents to $7.79 in the past 30 days.
NVDA's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 0.26%. Shares of the company have soared 134.3% in the past year.
The Zacks Consensus Estimate for Salesforce’s second-quarter fiscal 2024 earnings has been revised southward by a penny to $1.60 per share over the past 60 days. For fiscal 2024, earnings estimates have moved up by 4 cents to $7.44 in the past 60 days.
CRM's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.5%. Shares of the company have gained 16.3% in the past year.
The Zacks Consensus Estimate for Meta Platforms' third-quarter 2023 earnings has been revised upward by 15.1% to $3.44 per share over the past seven days. For 2023, earnings estimates have moved north by 7.9% to $12.94 in the past seven days.
META’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 19%. Shares of the company have surged 86.2% in the past year.
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