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Arrow's (ARW) Q1 Earnings Miss Estimates, Revenues Beat
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Arrow Electronics Inc. (ARW - Free Report) reported fourth-quarter 2019 adjusted earnings per share of 97 cents, down 49% on a year-over-year basis. The figure also missed the Zacks Consensus Estimate by 12.6%.
Revenues came in at $6.38 billion, down 11% from the year-ago quarter. Adjusted revenues dropped 9% year over year. The revenue figure, however, beat the consensus mark of $5.96 billion.
Demand for electronic components and IT remained low during the first quarter, as a result of the coronavirus-led economic disruptions.
However, a strong uptrend in design activity across all regions was a breather.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Adjusted revenues from Global Components decreased 12% year over year to $4.55 billion. On a reported basis, revenues declined 10%.
Region-wise, the segment’s adjusted revenues from the Americas decreased 15% due to high levels of inventory with customers. Adjusted sales from the Asia Pacific declined 5% year over year. Global Components’ contribution from Europe fell 10% on an adjusted basis. Components sales in the Americas decreased 16% year over year, as adjusted.
Adjusted revenues from Global Enterprise Computing Solutions (ECS) came in at $1.83 billion, down 6% year over year. The decline in demand for servers, networking and services took a toll on revenues from this segment. Moreover, the quarter ended two days earlier on Mar 28, instead of Mar 30. This also had a negative impact on revenues.
Billings for the ECS segment were flat year over year during the first quarter.
ECS revenues from the Americas declined 6% after adjusting for foreign-currency changes. Adjusted sales from Europe fell 5% year over year.
Notably, backlog improved sequentially. However, lead times declined year over year in the first quarter. The overall book-to-bill ratio improved and came above parity at 1.12.
Strong design activity was a positive.
Margins
Arrow’s non-GAAP gross profit decreased 14.7% from the prior-year quarter to $728.4 million.
Operating income dropped 43.5% to $156.5 million.
Balance Sheet and Cash Flow
Arrow exited the first quarter with cash and cash equivalents of $201 million compared with the previous quarter’s $300.1 million.
Long-term debt was $2.22 billion compared with $2.64 billion at the end of the prior quarter.
The company’s cash flow from operations was $466.9 million.
In the first quarter, Arrow returned approximately $150 million to shareholders through the stock-repurchase program and was left with approximately $188 million of authorization.
Guidance
For the second quarter of 2020, sales are expected between $6.08 billion and $6.68 billion.
Global Components sales are projected at $4.4-$4.7 billion. Global ECS sales are estimated to be $1.68-$1.98 billion.
Interest and other expenses will presumably be about $40 million. As a result, the company projects non-GAAP earnings per share of $1.38-$1.54.
Long-term earnings growth rate for Zoom, Pixelworks and Avid is currently pegged at 26.56%, 20% and 20%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Arrow's (ARW) Q1 Earnings Miss Estimates, Revenues Beat
Arrow Electronics Inc. (ARW - Free Report) reported fourth-quarter 2019 adjusted earnings per share of 97 cents, down 49% on a year-over-year basis. The figure also missed the Zacks Consensus Estimate by 12.6%.
Revenues came in at $6.38 billion, down 11% from the year-ago quarter. Adjusted revenues dropped 9% year over year. The revenue figure, however, beat the consensus mark of $5.96 billion.
Demand for electronic components and IT remained low during the first quarter, as a result of the coronavirus-led economic disruptions.
However, a strong uptrend in design activity across all regions was a breather.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote
Segmental Details
Adjusted revenues from Global Components decreased 12% year over year to $4.55 billion. On a reported basis, revenues declined 10%.
Region-wise, the segment’s adjusted revenues from the Americas decreased 15% due to high levels of inventory with customers. Adjusted sales from the Asia Pacific declined 5% year over year. Global Components’ contribution from Europe fell 10% on an adjusted basis. Components sales in the Americas decreased 16% year over year, as adjusted.
Adjusted revenues from Global Enterprise Computing Solutions (ECS) came in at $1.83 billion, down 6% year over year. The decline in demand for servers, networking and services took a toll on revenues from this segment. Moreover, the quarter ended two days earlier on Mar 28, instead of Mar 30. This also had a negative impact on revenues.
Billings for the ECS segment were flat year over year during the first quarter.
ECS revenues from the Americas declined 6% after adjusting for foreign-currency changes. Adjusted sales from Europe fell 5% year over year.
Notably, backlog improved sequentially. However, lead times declined year over year in the first quarter. The overall book-to-bill ratio improved and came above parity at 1.12.
Strong design activity was a positive.
Margins
Arrow’s non-GAAP gross profit decreased 14.7% from the prior-year quarter to $728.4 million.
Operating income dropped 43.5% to $156.5 million.
Balance Sheet and Cash Flow
Arrow exited the first quarter with cash and cash equivalents of $201 million compared with the previous quarter’s $300.1 million.
Long-term debt was $2.22 billion compared with $2.64 billion at the end of the prior quarter.
The company’s cash flow from operations was $466.9 million.
In the first quarter, Arrow returned approximately $150 million to shareholders through the stock-repurchase program and was left with approximately $188 million of authorization.
Guidance
For the second quarter of 2020, sales are expected between $6.08 billion and $6.68 billion.
Global Components sales are projected at $4.4-$4.7 billion. Global ECS sales are estimated to be $1.68-$1.98 billion.
Interest and other expenses will presumably be about $40 million. As a result, the company projects non-GAAP earnings per share of $1.38-$1.54.
Zacks Rank & Key Picks
Arrow currently carries a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader technology sector are Zoom Video Communications, Inc. (ZM - Free Report) , Pixelworks, Inc. (PXLW - Free Report) and Avid Technology, Inc. , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Zoom, Pixelworks and Avid is currently pegged at 26.56%, 20% and 20%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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