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Arrow Electronics, Inc. Just Recorded A 38% EPS Beat: Here's What Analysts Are Forecasting Next

Simply Wall St
·4 min read

As you might know, Arrow Electronics, Inc. (NYSE:ARW) just kicked off its latest quarterly results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$7.2b, some 7.4% above estimates, and statutory earnings per share (EPS) coming in at US$2.13, 38% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Arrow Electronics after the latest results.

View our latest analysis for Arrow Electronics

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After the latest results, the nine analysts covering Arrow Electronics are now predicting revenues of US$29.2b in 2021. If met, this would reflect a reasonable 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 37% to US$7.96. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$28.4b and earnings per share (EPS) of US$7.56 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

It will come as no surprise to learn that the analysts have increased their price target for Arrow Electronics 9.7% to US$87.88on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Arrow Electronics analyst has a price target of US$113 per share, while the most pessimistic values it at US$81.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Arrow Electronics'historical trends, as next year's 5.9% revenue growth is roughly in line with 5.2% annual revenue growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 7.8% next year. So although Arrow Electronics is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Arrow Electronics following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Arrow Electronics analysts - going out to 2022, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Arrow Electronics you should know about.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.