Arrow Electronics - Aggressive Growth

Arrow Electronics Inc (ARW) estimates are surging and now projecting earnings to more than double this year. Analysts had no choice but to raise their outlook after the company set records for earnings and revenue last quarter.

Company Description

Arrow offers industrial and commercial electronics, services and computing solutions. The company works with over 900 suppliers and 125,000 OEMs around the world.

Earnings to Double

The full-year Zacks Consensus Estimate for this year is $3.84, which is 129% higher than the $1.68 earned in 2009. Next year's forecasts are averaging $3.92, which is a 2% growth rate.

Assuming the estimates continue to trend higher throughout the year, as they have this year, earnings should grow much more than 2% in 2011.

Shares are Cheap

Shares of ARW are trading at a bargain with a forward P/E under 7 times. The PEG ratio is just 0.4, meaning the growth rates are coming at a steep discount. Arrow's price to book will also attract value investors at 1.0 and the price to sales is just 0.2 times.

On a Roll

Arrow has topped Wall Street's expectations in each of the past 7 quarters. The latest coming on Jul 28 when the company reported earnings per share of $1.01, which was a record high and 20 cents better than expected.

Sales jumped 36% to $4.6 billion in the second quarter of 2010, to set a company record. In the same release they also announced another $100 million authorization to repurchase outstanding shares.

The Chart

The chart below shows the trend for the full-year consensus estimates. You can see that they had a nice v-shaped bounce, but the share price is still lagging. The last time estimates were this high, share were trading in the mid $40's rather than mid $20's. So, there is plenty of upside moving forward.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service
 
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