Are Investors Undervaluing Arrow Electronics (ARW) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Arrow Electronics (ARW) is a stock many investors are watching right now. ARW is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.91. This compares to its industry's average Forward P/E of 11.24. Over the past year, ARW's Forward P/E has been as high as 11.80 and as low as 9.46, with a median of 10.49.
ARW is also sporting a PEG ratio of 0.49. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ARW's PEG compares to its industry's average PEG of 0.59. ARW's PEG has been as high as 1.58 and as low as 0.49, with a median of 1.18, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ARW has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.34.
Finally, investors will want to recognize that ARW has a P/CF ratio of 9.48. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.85. Over the past year, ARW's P/CF has been as high as 11.29 and as low as -89.39, with a median of 9.58.
Value investors will likely look at more than just these metrics, but the above data helps show that Arrow Electronics is likely undervalued currently. And when considering the strength of its earnings outlook, ARW sticks out at as one of the market's strongest value stocks.
Click to get this free report
Arrow Electronics, Inc. (ARW): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.