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

Shares of Arrow Electronics (NYSE: ARW) have risen more than 1.8x from $69 at the end of 2018 to nearly $125 today, largely due to favorable changes in its sales and price-to-earnings ratio. The company’s share price rose on strong revenue growth of 23% over the period, coupled with a higher price-to-earnings ratio and a sharp decline in the number of shares outstanding. Also, over the same period, the S&P 500 has returned about 65%, which means AR W stock has outperformed the index since the end of 2018.

In our interactive dashboard, Why Arrow Electronics Stock Moves: ARW stock is up 81% since 2018, we break down the factors behind this move.

ARW’s total revenue increased 23% from $29.7 billion in fiscal 2018 to $36.5 billion on an LTM basis

Arrow’s total revenue initially fell from $29.7 billion in fiscal 2018 to $28.7 billion in fiscal 2020, largely due to an oversupply of semiconductors. However, sales took off in fiscal 2021 to $34.5 billion, with sales currently at $36.5 billion on an LTM basis, driven by accelerating demand across industries. The company specializes in distribution and value-added services related to electronic components and computer products, with global component sales accounting for about 76% of total FY21 sales of $26.4 billion.For more details on Arrow’s revenue and comparison with peers, see Arrow Electronics Revenue Comparison

EPS up 60% from $336.84 in 2018 to current $538.69

Arrow’s revenue rose from $29.7 billion in 2018 to $36.5 billion today, while shares outstanding fell 23%, from 88.1 million shares in 2018 to about 67.8 million shares today. As a result, the RPS has jumped from $336.84 in FY18 to the current $538.69.

Arrow’s price-to-sales (P/S) multiple rose strongly from 0.15x in 2018 to 0.26x by the end of 2021, but has now fallen back to 0.23x, still about 1.5x above 2018 levels

Arrow’s price-to-earnings ratio rose strongly to around 0.26 by the end of 2020 on rising investor expectations for increased semiconductor sales. However, as the current geopolitical tensions and increased economic uncertainty weigh on the broader market, the P/E ratio has retreated and is currently trading at around 0.23x. For more details on company stock returns and comparisons with peers, see Arrow Electronics Stock Return Comparison.

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