Here’s How Arrow Electronics Stock Managed To Beat The Markets Since 2018

ARW: Arrow Electronics logo
ARW
Arrow Electronics

Arrow Electronics Inc. (NYSE: ARW) stock price rose more than 1.8x from $69 in 2018 end to almost $125 currently, primarily due to favorable changes in its sales and P/S multiple. During this period, the company witnessed a strong 23% rise in revenues, and combined with a higher P/S multiple and a substantial drop in the outstanding share count, the company’s stock price has rallied. Further, over the same period, the S&P 500 returned around 65%, meaning that ARW stock managed to outperform the index since 2018-end.

In our interactive dashboard, Why Arrow Electronics Stock Moved: ARW Stock Has Gained 81% Since 2018, we break down the factors behind this move.

(A) ARW’s Total Revenue has grown 23% from $29.7 billion in FY 2018 to $36.5 billion on an LTM basis

  • Arrow’s total revenue initially dropped from $29.7 billion in FY 2018 to $28.7 billion in FY 2020 primarily due to the semiconductor supply glut.
  • However, sales took off in FY 2021, coming in at $34.5 billion, due to accelerated demand from a variety of industries, and sales currently stand at $36.5 billion on an LTM basis.
  • The company specializes in distribution and value-added services relating to electronic components and computer products, with global components sales making up around 76% of FY ’21 total sales at $26.4 billion.
  • For additional details about Arrow’s revenues and comparison to peers, see Arrow Electronics (ARW) Revenue Comparison
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(B) Revenue per share (RPS) increased 60% from $336.84 in 2018 to $538.69 currently

  • Arrow’s revenue rose from $29.7 billion in 2018 to $36.5 billion currently, while the outstanding share count decreased 23%, from 88.1 million in 2018 to around 67.8 million currently.
  • Due to this, RPS has jumped from $336.84 in FY ’18 to $538.69 currently.

(C) Price-To-Sales (P/S) multiple for Arrow rose strongly from 0.15x in 2018 to 0.26x by 2021 end, but has pulled back to 0.23x currently, still around 1.5x higher than its 2018 level

  • Arrow’s P/S multiple rose strongly to around 0.26x by late 2020, on the back of rising investor expectations surrounding increased semiconductor sales.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 0.23x.
  • For additional details about the company stock returns and comparison to peers, see Arrow Electronics (ARW) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns May 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ARW Return 8% -5% 79%
 S&P 500 Return -1% -14% 83%
 Trefis Multi-Strategy Portfolio -3% -20% 216%

[1] Month-to-date and year-to-date as of 5/17/2022
[2] Cumulative total returns since the end of 2016

 

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