Arrow Electronics (NYSE:ARW) delivers shareholders decent 23% CAGR over 3 years, surging 5.7% in the last week alone
One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Arrow Electronics, Inc. (NYSE:ARW) shareholders have seen the share price rise 87% over three years, well in excess of the market return (30%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 9.7%.
Since it's been a strong week for Arrow Electronics shareholders, let's have a look at trend of the longer term fundamentals.
View our latest analysis for Arrow Electronics
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Arrow Electronics became profitable within the last three years. That would generally be considered a positive, so we'd expect the share price to be up.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Arrow Electronics has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Arrow Electronics stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that Arrow Electronics has rewarded shareholders with a total shareholder return of 9.7% in the last twelve months. Having said that, the five-year TSR of 11% a year, is even better. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Arrow Electronics (at least 2 which can't be ignored) , and understanding them should be part of your investment process.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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