Shares of Arrow Electronics, Inc. (NYSE:ARW) have been on an incredible run since the broader market bottomed in March 2020, rallying by an impressive 176% since then. ARW stock is also up more than 10% in 2021.
Arrow Electronics stock has been trading at record levels, juiced by record fourth-quarter sales, net income, and earnings per share (EPS). The company’s fourth-quarter net sales climbed 15%, net income more than doubled, and EPS jumped 126%.
During the quarter, Arrow Electronics, Inc. returned $100.0 million to its shareholders through its stock repurchase program. In full-year 2020, the company returned $475.0 million, the most it has ever returned in a single year—all while reducing its debt by $715.0 million.
And thanks to strong first-quarter guidance, the outlook for this still-undervalued stock remains solid.
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ARW Stock Overview
Arrow Electronics is one of the world’s largest value-added distributors of electronic components, including semiconductors, capacitors, and interconnect products. The Denver-based company also provides enterprise computing solutions. (Source: “Arrow Electronics 2021 Fact Sheet,” Arrow Electronics, Inc. last accessed March 17, 2021.)
The company operates through two segments: Global Components and Global Enterprise Computing Solutions (ECS).
Through its Global Components segment, Arrow Electronics markets and distributes electronic components to original equipment manufacturers and contract manufacturers. It also provides a range of value-added capabilities.
Through its Global ECS segment, the company provides enterprise computing solutions to value-added resellers.
Arrow Electronics, Inc.’s diverse customer base is made up of more than 180,000 leading global technology manufacturers and service providers in the aerospace and defense, business intelligence, cloud, data center, Internet of Things, lighting, mobility, power management, security, and transportation markets.
Record Fourth-Quarter Results
For the fourth quarter ended December 31, 2020, Arrow Electronics reported record revenue of $8.5 billion, a 15% increase year-over-year. (Source: “Arrow Electronics Reports Fourth-Quarter and Year-End 2020 Results,” Arrow Electronics, Inc., February 4, 2021.)
The company’s fourth-quarter net income was $236.0 million ($3.08 per share), a 110% increase over the fourth-quarter 2019 net income of $112.0 million ($1.36 per share). Its adjusted fourth-quarter net income was $243.0 million ($3.17 per share), compared to $181.0 million ($2.20 per share) in the same period the previous year.
Arrow Electronics, Inc.’s full-year 2020 sales slipped one-percent to $28.7 billion. Its 2020 net income was $584.0 million ($7.43 per share), versus a 2019 net loss of $204.0 million ($2.44 loss per share). The company’s adjusted net income was $610.0 million ($7.75 per share) in 2020, compared to $636.0 million ($7.55 per share) in 2019.
For the first quarter of fiscal 2021, Arrow Electronics expects to report:
- Sales of $7.6 to $8.2 billion, versus Q1 2020 revenue of $6.4 billion
- Net income per share of $2.02 to $2.18, compared to $0.61 in Q1 2020
- Adjusted EPS of $2.17 to $2.33, versus $0.97 in Q1 2020
Despite operating in the worst economic environment since the Great Depression, Arrow Electronics, Inc. reported exceptionally strong fourth-quarter results, which included record fourth-quarter sales, net income, and EPS.
With strong first-quarter guidance, there’s every reason to believe that Arrow Electronics stock will continue to trade at high levels for the foreseeable future.