Should Value Investors Buy Arrow Electronics (ARW) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Arrow Electronics (ARW) is a stock many investors are watching right now. ARW is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Investors should also recognize that ARW has a P/B ratio of 1.47. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.53. Over the past year, ARW's P/B has been as high as 1.52 and as low as 1.06, with a median of 1.26.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ARW has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.32.
Finally, investors will want to recognize that ARW has a P/CF ratio of 5.52. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.41. ARW's P/CF has been as high as 5.52 and as low as 3.54, with a median of 4.38, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Arrow Electronics is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ARW feels like a great value stock at the moment.
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Arrow Electronics, Inc. (ARW) : Free Stock Analysis Report
