Screened 2026-05-28. Price USD 216.40.
| Metric | Value |
|---|---|
| Current Price | USD 216.40 |
| 52w High / Low | USD 224.83 / 101.79 |
| YTD Return | +91.4% (from USD 113.04 Jan 1) |
| 1yr Return | +82.6% |
| 5yr Return | +79.8% (from ~USD 120) |
| Market Cap | USD 11.1B |
The stock doubled off its Jan 2026 lows following Q1 2026 blowout results (May 9). It is now near the 52w high. This is not a cyclical-trough entry — it has moved substantially off the bottom.
| Metric | Value |
|---|---|
| Trailing P/E | 15.5x |
| Forward P/E | 10.2x |
| P/B | 1.64x |
| P/S | 0.33x |
| EV/EBITDA | 10.4x |
| Dividend Yield | 0% (no dividend) |
| Gross Margin | 11.2% (distributor-typical thin) |
| Operating Margin | 2.7% (TTM) |
Gap between trailing (15.5x) and forward (10.2x) is large — market is pricing a profitability inflection, exactly the pattern flagged in shr-003. The bull case rests entirely on the Q2/Q3 2026 earnings materializing above consensus.
| Item | Amount |
|---|---|
| Cash | USD 286M |
| Total Debt | USD 2.47B |
| Net Debt | USD 2.18B |
| Working Capital | USD 6.27B |
| Current Assets | USD 32.6B |
| Current Liabilities | USD 26.3B |
| Equity | USD 6.74B |
| Inventory | USD 5.72B |
| Accounts Receivable | USD 25.96B |
| Current Ratio | 1.24x |
| Interest Coverage (net, TTM) | 8.0x |
The massive current assets/liabilities are typical distributor balance sheet — AR and AP both balloon because they sit between suppliers and customers on working capital. Interest coverage at 8x is acceptable. Debt/equity at 0.47x is moderate. Inventory at USD 5.7B = ~1.7 months of sales; turnover at 5.6x/yr.
| Year | Revenue | Gross Profit | Operating Inc | Net Income | Diluted EPS | FCF | Buybacks |
|---|---|---|---|---|---|---|---|
| 2022 | $37.1B | $4.84B | $2.08B | $1.43B | $21.80 | -$112M | $1,049M |
| 2023 | $33.1B | $4.15B | $1.56B | $0.90B | $15.84 | $622M | $770M |
| 2024 | $27.9B | $3.29B | $0.91B | $0.39B | $7.29 | $1,038M | $265M |
| 2025 | $30.9B | $3.47B | $0.94B | $0.57B | $10.93 | -$37M | $162M |
| Q1 2026 | $9.47B | $1.09B | $0.40B | $0.235B | $5.22 | — | — |
FCF pattern is distributor-characteristic: working capital is a cash machine on the way down (2023–2024 destocking = $1B+ FCF) and a cash drain on the way up (2025 = -$37M FCF as inventory/AR rebuild). Q1 2026 revenue +39% YoY is the clearest signal the cycle inflection has arrived.
Q2 guidance from May earnings call: ~USD 9.45B revenue midpoint, 7.9% above analyst consensus — indicating the recovery has not yet plateaued.
ECS (Enterprise Computing Solutions) = Arrow's reseller of cloud/IT infrastructure hardware. Global Components = the semiconductor/passive distribution core. AI datacenters and networking benefiting ECS; traditional non-AI semi recovering slowly.
| Year | Diluted Shares | Buybacks |
|---|---|---|
| 2022 | 65.5M | $1.05B |
| 2023 | 57.0M | $770M |
| 2024 | 53.8M | $265M |
| 2025 | 52.3M | $162M |
| Q1 2026 | ~51.1M | — |
| May 2026 | New $1B authorization | — |
Shares outstanding reduced from ~65M to ~51M = 21% buyback over 4 years. Buyback intensity collapsed during the trough (2024/25) as FCF was constrained. The new $1B authorization (May 13, 2026) = ~9% of current mkt cap, a meaningful signal of management confidence at this price. This is a consistent buyback story, not a dividend substitute in distress.
Transactions coded 'A' are awards/grants (not open-market buys). Coded 'S' are open-market sales. Coded 'M' are option exercises.
| Date | Name | Type | Shares |
|---|---|---|---|
| 2026-05-22 | Lamercie (CFO) | S (sale) | 12,626 |
| 2026-05-21 | Zech Gretchen | S (sale) | 32,870 |
| 2026-05-20 | Nowak Eric | S (sale) | 48,835 |
| 2026-05-15 | Multiple officers | A (awards) | ~58K total |
| 2026-05-12 | Multiple officers | A (awards) | ~60K total |
Multiple officers selling in May after the +90% YTD run. No open-market purchases detected in the past 12 months. Insider selling immediately after the Q1 blowout and stock near 52w high is a cautionary signal per shr-002 — not panic selling, but consistent with executives monetizing a price spike.
| Metric | Value |
|---|---|
| Analysts (yfinance) | 4 |
| Consensus | Hold (2.75/5) |
| Mean Target | USD 214.50 |
| Median Target | USD 226.50 |
| High Target | USD 240.00 |
| Low Target | USD 165.00 |
Consensus is Hold and mean target is essentially at current price (USD 214.50 vs USD 216.40). BofA upgraded to Neutral from Underperform on May 13 and raised PT from $122 to $233 — a massive capitulation upgrade after the stock already ran +90%. Overall analyst stance is 9 Sell/Strong Sell, 2 Buy, 2 Hold (Finnhub data May 2026) — heavily skewed skeptical despite the recovery.
Q1 2026 (reported May 9, 2026):
Q4 2025 (reported ~Feb 2026):
Book-to-bill: not reported numerically in available summaries, but management commentary "broad-based demand recovery in components" implies BTB approaching or above 1.0. Inventory burn in non-AI channels largely complete per Q4/Q1 commentary.
Arrow is deep in the non-AI semiconductor distributor upcycle. The 2022 peak → 2024/25 trough → 2026 recovery follows a classic 2.5–3yr inventory correction. The Q1 2026 +39% YoY revenue print confirms the inflection. However:
| Filter | Result | Note |
|---|---|---|
| F1. Mkt cap > $2B | PASS | $11.1B |
| F2. Current ratio ≥ 2.0 | FAIL | 1.24x — distributor structure; LT debt $2.47B < WC $6.27B (second part PASS) |
| F3. Positive EPS 5–10yr | PASS | All 4 reported years positive |
| F4. Dividend | STRUCTURAL FAIL | Zero dividend; buyback substitute. Consistent record: $3.2B returned 2022–2026; new $1B auth May 2026. Per thesis hook, this is structural not distress. |
| F5. EPS growth ≥33% | FAIL | Raw 2022→2025: -50% (cycle peak-to-mid-recovery). Context: 2022 was the peak. Cycle-normalized, 5yr EPS growth per Finnhub 8.1%. Cannot pass this filter. |
| F6. P/E ≤ 15 (≤20 quality) | BORDERLINE | Trailing 15.5x (just above strict), forward 10.2x (clear pass) |
| F7. P/E × P/B ≤ 22.5 | FAIL | 15.5 × 1.64 = 25.4 |
Score: 2 PASS, 1 BORDERLINE, 4 FAIL (1 structural, 3 substantive)
shr-017 check: Unlike Maersk (which scored well on trailing and was entering a downcycle), ARW is scoring poorly on trailing because it is recovering. F5 and F7 FAIL reflect the trough, not a forward deterioration. This is the opposite pattern — forward metrics are improving, not collapsing. Not a cyclical trap.
Graham formula: V = EPS × (8.5 + 2g). Current price USD 216.40.
| EPS Basis | g=0% | g=3% | g=5% | g=7.5% | g=10% | Break-even g |
|---|---|---|---|---|---|---|
| Trailing $13.96 | $119 (-45%) | $202 (-6%) | $258 (+19%) | $328 (+52%) | $398 (+84%) | 3.5% |
| Normalized $10.93 | $93 (-57%) | $158 (-27%) | $202 (-7%) | $257 (+19%) | $312 (+44%) | 5.6% |
| Forward $21.31 | $181 (-16%) | $309 (+43%) | $394 (+82%) | $501 (+131%) | $607 (+181%) | 0.8% |
Key insight (shr-003): The forward EPS of $21.31 only needs 0.8% growth to justify current price — but that forward EPS is itself a cyclical recovery number (reflects the Q1 2026 trajectory), not a baseline. Using normalized EPS of $10.93, the break-even growth is 5.6%, which is achievable if the recovery sustains through 2027.
The market is pricing a full inflection at forward P/E 10.2x. If forward EPS materializes, there is no margin of safety problem. If the recovery stalls (Asia margins, NVDA direct), the trailing EPS basis shows -6% to -57% against the price.
| Category | Status | Detail |
|---|---|---|
| Recent price action | RED | +91% YTD, near 52w high — not a trough entry |
| Earnings/news | GREEN | Q1 blowout +81% EPS surprise; Q2 guide strong |
| Insider activity | AMBER | Multiple officer sales May 2026, no open-market buys |
| Analyst revisions | AMBER | Heavy sell-side skepticism (9 sell/neutral), but upgrade trend beginning (BofA) |
| Dividend/buyback | GREEN | $1B buyback authorized May 2026, consistent history |
| Balance sheet | GREEN | Interest coverage 8x, debt manageable |
| Short interest | No data | Not flagged as elevated in available sources |
2 RED, 2 AMBER, 3 GREEN — the RED is entirely about price, not fundamentals. The thesis is intact but entry timing is compromised.
Arrow Electronics is a genuine Graham cyclical recovery candidate with a solid underlying thesis: global #1 distributor, consistent buyback compounder, clearly identified cycle inflection, and new $1B capital return commitment. The structural business has not changed.
However, the stock has already run +91% YTD from USD 113 to USD 216. At current price:
The opportunity was at USD 100–130 (Jan–Mar 2026). At USD 216, ARW is fairly to fully priced on the recovery scenario. There is no margin of safety left on trailing EPS; forward EPS at $21.31 only works if the cycle recovery is complete and sustained through 2027, and even then Graham IV at g=3% on forward EPS is $309 (43% upside) — but that requires the forward EPS to be structural, not cyclical.
Watch levels:
VERDICT LINE: WATCHLIST (YELLOW) — Thesis valid, cycle confirmed, but +91% YTD run has consumed the margin of safety. Re-examine at USD 150 or below. No entry at current price.