Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy) on Sep 5, following impressive
Why the Upgrade?
Arrow, an electronic component distributor, posted
better-than-expected second-quarter results with both earnings
and revenues surpassing the Zacks Consensus Estimate. Revenues
were positively impacted by higher sales from the Global
Enterprise Computing Solutions (ECS) segment, which more than
offset the marginal decline in revenues from Global component
The company was also positive about its expense reduction
plans, saying that it would be able to reduce costs by $75.0
million, which is a significant improvement from the $40.0
million committed earlier. The company is optimistic about
selective investments in long-term opportunities.
Moreover, Arrow recently bought Munich-based Computerlinks for
$300 million. The acquisition, expected to close in the fourth
quarter of the current fiscal year, will add approximately 20
cents to 25 cents (excluding the impact of amortization of
related intangible assets) to Arrow's earnings per share for the
The acquisition would also help Arrow gain traction in the
emerging data center market. Additionally, the product portfolio
of Computerlinks will enhance Arrow's ECS offerings. Arrow's ECS
has partnerships with many companies such as Check Point,
) and International Business Machines, and provides varied
products and services related to security and networking to its
However, the company provided tepid third-quarter guidance,
reflecting macro concerns. Nonetheless, its positive commentary
about enhanced productivity, annual cost savings and successful
ERP implementation across Europe is encouraging. We believe that
Arrow could get better contribution from Europe as soon as the
ERP program becomes operational.
Other Stocks to Consider
Besides Arrow Electronics, other stocks with favorable Zacks
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
ARROW ELECTRONI (ARW): Free Stock Analysis
JUNIPER NETWRKS (JNPR): Free Stock Analysis
MICRON TECH (MU): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis
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