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Should Value Investors Buy Arrow Electronics (ARW) Stock?

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Zacks Equity Research
·2 min read
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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Arrow Electronics (ARW). ARW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

ARW is also sporting a PEG ratio of 1.13. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ARW's PEG compares to its industry's average PEG of 1.26. ARW's PEG has been as high as 10.07 and as low as 1.07, with a median of 1.43, all within the past year.

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 0.26. This compares to its industry's average P/S of 0.34.

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