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Arrow Electronics (ARW) Beats on Q1 Earnings & Sales Estimates

Arrow Electronics ARW reported better-than-expected first-quarter 2023 results. The company’s adjusted earnings of $4.60 per share beat the Zacks Consensus Estimate of $4.47. However, the bottom line declined 15.3% on a year-over-year basis, mainly due to lower revenues and a negative impact of 13 cents per share from an unfavorable foreign currency exchange rate.

In the first quarter of 2023, Arrow Electronics reported revenues of $8.74 billion, down 3.7% from the year-ago quarter. Excluding the negative impact of $203 million from unfavorable currency exchange rates, sales increased 2%. However, the top line surpassed the Zacks Consensus Estimate by 1.3%.

With supply-chain constraints improving, the company continued to witness normalization in shortage market activities and was able to deliver a better-than-expected quarterly performance.

Arrow Electronics, Inc. Price, Consensus and EPS Surprise

Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote

First-Quarter Details

Adjusted revenues from Global Components decreased 5% year over year to $6.86 billion. Region-wise, the segment’s revenues from Europe jumped 17%, while sales from the Americas and Asia-Pacific regions plunged 5% and 19%, respectively.

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Adjusted revenues from Global Enterprise Computing Solutions (“ECS”) were $1.88 billion, flat year over year. Region-wise, the segment’s revenues from America declined 5%, while sales in the European region increased 7%.

The non-GAAP operating income from Global Components and Global ECS was $424.3 million and $82.3 million, respectively.

Arrow Electronics’ non-GAAP operating income plunged 17.5% to $432.7 million in the first quarter of 2023 from the year-ago quarter’s $524.3 million. The non-GAAP operating margin shrunk 80 basis points to 5%.

Balance Sheet and Cash Flow

Arrow Electronics exited the first quarter with cash and cash equivalents of $205.6 million compared with the previous quarter’s $176.9 million.

The long-term debt was $3.72 billion, up from $3.6 billion at the end of the previous quarter.

The New York-based electronic component distributor generated $223.8 million in cash from operating activities in the reported quarter.

In the first quarter of 2022, ARW returned $303.8 million to its shareholders through share repurchases. It has approximately $1 billion remaining under its current share repurchase authorization.

Second-Quarter 2023 Guidance

For the second quarter of 2023, sales are estimated between $8.42 billion and $9.02 billion.

Global Components sales are projected in the band of $6.64-$7.04 billion. Global ECS sales are anticipated between $1.78 billion and $1.98 billion.

Interest expenses will presumably be $90 million. As a result, the company projects non-GAAP earnings per share in the band of $4.25-$4.45.

Arrow Electronics expects changes in foreign currencies to increase second-quarter sales by $54 million and earnings per share by 4 cents on a quarter-over-quarter basis.

Zacks Rank & Stocks to Consider

Currently, Arrow carries a Zacks Rank #3 (Hold). Shares of ARW have risen 10% year to date (YTD).

Some better-ranked stocks from the broader technology sector are Wix.com WIX, Zscaler ZS and Check Point Software CHKP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from 16 cents per share 60 days ago. For 2023, earnings estimates have been revised northward by 7 cents to $1.49 per share in the past 60 days.

Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have declined 2% YTD.

The Zacks Consensus Estimate for Zscaler's third-quarter fiscal 2023 earnings has been revised 2 cents northward to 39 cents per share in the past 60 days. For fiscal 2023, earnings estimates have been revised northward by 2 cents to $1.52 per share in the past 30 days.

Zscaler’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 29.7%. Shares of ZS have declined 22% YTD.

The Zacks Consensus Estimate for Check Point Software's second-quarter 2023 earnings has remained unchanged at $1.89 per share for the past 60 days. For 2023, earnings estimates have moved upward by a penny to $7.97 per share in the past 30 days.

Check Point Software's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 3.7%. Shares of CHKP have declined 5.2% YTD.

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