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This Just In: Analysts Are Boosting Their Arrow Electronics, Inc. (NYSE:ARW) Outlook for This Year

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Simply Wall St
·3 min read
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Arrow Electronics, Inc. (NYSE:ARW) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

Following the upgrade, the latest consensus from Arrow Electronics' eight analysts is for revenues of US$33b in 2021, which would reflect a solid 15% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 23% to US$9.22. Previously, the analysts had been modelling revenues of US$30b and earnings per share (EPS) of US$8.21 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Arrow Electronics

earnings-and-revenue-growth
earnings-and-revenue-growth

With these upgrades, we're not surprised to see that the analysts have lifted their price target 13% to US$108 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Arrow Electronics analyst has a price target of US$113 per share, while the most pessimistic values it at US$96.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Arrow Electronics is an easy business to forecast or the underlying assumptions are obvious.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arrow Electronics' past performance and to peers in the same industry. The analysts are definitely expecting Arrow Electronics' growth to accelerate, with the forecast 15% growth ranking favourably alongside historical growth of 4.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Arrow Electronics is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Arrow Electronics.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Arrow Electronics that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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 (at) simplywallst.com.