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Is Arrow Electronics (ARW) Stock Undervalued Right Now?

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Zacks Equity Research
·2 min read
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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Arrow Electronics (ARW). ARW is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 9.73, which compares to its industry's average of 10.29. Over the past year, ARW's Forward P/E has been as high as 11.80 and as low as 5.32, with a median of 10.33.

Investors should also note that ARW holds a PEG ratio of 0.64. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ARW's industry has an average PEG of 1.22 right now. Over the last 12 months, ARW's PEG has been as high as 3.20 and as low as 0.64, with a median of 1.36.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ARW has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.31.

These are just a handful of the figures considered in Arrow Electronics's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ARW is an impressive value stock right now.


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Zacks Investment Research