Arrow Electronics Inc

Arrow Electronics has earned a Zacks Rank #1 (Strong Buy) after analysts significantly raised their earnings estimates for the electronics maker. The Zacks Consensus Estimate for the current quarter has increased 11.51% over the last 30 days to $4.39 per share, representing a year-over-year change of +82.2%. For the full year, the consensus estimate has risen 6.72% to $20.44 per share, a year-over-year change of +85.5%. Three analysts raised full-year estimates over the past month with no negative revisions, and the stock has gained 7.2% over the past four weeks.

Arrow Electronics has expanded its IBM distribution coverage to seven additional countries, enabling the company to distribute IBM solutions to channel partners in Bulgaria, Croatia, the Czech Republic, Germany, Slovakia, Slovenia and Ukraine. The expansion allows channel partner organizations in those areas to deliver scalable, enterprise-ready solutions supporting customer transformation journeys. Arrow will distribute IBM's portfolio across infrastructure, automation and data, including software and services for modern application development, hybrid cloud deployments and resilient IT operations. The move builds on Arrow's longstanding global relationship with IBM, which already spans regions including Benelux, Estonia, France, Hungary, Iberia, Ireland, Morocco, Nordics, Poland, UK and North America. Salesh Rampersad, chief revenue officer for Arrow's global enterprise computing solutions business, said the coverage expansion strengthens the relationship and reflects Arrow's focus on bringing high-quality solutions and services to market in the seven additional countries.

Zacks strategists Tracey Ryniec and John Blank discussed whether a U.S. recession could arrive in 2026, noting a weakening job market after July saw a loss of 23,000 jobs and downward revisions to the prior two months. They highlighted that despite a trillion dollars in AI spending and robust federal government spending, the economy is not booming, while the Federal Reserve left interest rates unchanged at its July meeting and next meets September 15-16, 2026. The S&P 500 and Russell 2000 are hitting new all-time highs, and AI spending is trickling down to old economy infrastructure companies involved in the data center buildout. The strategists identified three Zacks Rank #1 Strong Buy stocks: Arrow Electronics, which reported second quarter 2026 sales up 32% to $9.9 billion and has a price-to-earnings ratio of 10.3; MKS Inc., which saw revenue above guidance and earnings expected to jump 64.5% in 2026 with a forward P/E of 23.7; and SOLV Energy, which reported record revenue, a backlog up 44% year-over-year to a record $8.9 billion, and raised full year 2026 revenue guidance.

Arrow Electronics has earned the Microsoft Azure Virtual Desktop specialization, a validation of its expertise in deploying, scaling, and securing virtual desktop infrastructure on Azure. This follows the Infrastructure and Database Migration to Microsoft Azure specialization achieved in 2025. The specialization requires meeting stringent criteria around customer success and staff skilling, as well as passing a third-party audit. Arrow's global director of public cloud Sophie Daval called it a significant milestone that reinforces the company's commitment to supporting channel partners in delivering modern workplace solutions. Microsoft's general manager of partner program management Andrew Smith noted that Arrow demonstrated the skills and experience to offer clients a path to desktop-as-a-service in a scalable, secure, and cost-effective way.

Raymond James stated that the market may be overstating the financial impact of Dell Technologies’ decision to end its Enterprise Computing Distribution agreement with Arrow Electronics. The firm maintained an Outperform rating on Arrow, with analyst Melissa Fairbanks noting that the contract’s reported $1.4 billion value reflects gross billings, not revenue. The earnings impact is likely immaterial and should be offset by Arrow’s current business momentum. Earlier, CRN reported that Dell ended its decade-long distribution relationship with Arrow’s ECS unit after a formal review, creating a potential $1.4 billion-plus opportunity for competing distributors.

Arrow Electronics and Avnet are highlighted as potentially undervalued stocks by Zacks Investment Research, based on their value metrics and earnings outlook. Arrow Electronics holds a Zacks Rank #1 (Strong Buy) and a Value grade of A, with a P/E ratio of 9.44 compared to its industry average of 14.76, a PEG ratio of 0.46 versus an industry average of 0.49, a P/B ratio of 0.98 against an industry average of 2.13, a P/S ratio of 0.32 compared to an industry average of 0.48, and a P/CF ratio of 9.63 versus an industry average of 18.54. Avnet, also in the Electronics - Parts Distribution industry, carries a Zacks Rank #2 (Buy) and a Value grade of A, with a forward P/E of 10.47, a PEG ratio of 0.36, and a P/B ratio of 0.89. Both companies' current valuations and strong earnings outlooks make them stand out as top value picks.

Engineered components and systems stocks tracked by the publication reported a satisfactory first quarter, with revenues beating analysts' consensus estimates by 3.4% and next quarter's revenue guidance coming in 3.7% above expectations. Timken posted revenues of $1.23 billion, up 8% year on year and exceeding estimates by 5%, while Arrow Electronics led the group with revenues of $9.47 billion, a 39% increase that beat estimates by 12.9%. Worthington was the weakest performer, with revenues of $371.5 million missing estimates by 4%. Regal Rexnord and Park-Ohio also topped expectations, contributing to an average share price gain of 19.2% across the 13 companies since their latest earnings results.

Arrow Electronics has been removed from the Russell 1000 Defensive Index and the Russell 1000 Value-Defensive Index, signaling a change in its benchmark classification. Separately, Microsoft designated Arrow as a Frontier Distributor in its AI Cloud Partner Program, highlighting Arrow's expanding role in cloud and AI solution deployment through its ArrowSphere platform across EMEA and North America. The index removal may create near-term technical pressure but does not alter the company's fundamental outlook, which hinges on inventory management and margin performance amid demand normalization. The Microsoft recognition reinforces Arrow's push into higher-margin, recurring cloud revenues, seen as a counterbalance to risks in its traditional components distribution business. Some analysts project Arrow's revenue could reach $45.4 billion with earnings of $1.2 billion by 2029, implying 10.7% annual revenue growth and a roughly $500 million earnings increase from current levels.

Engineered components and systems stocks reported a strong first quarter, with the 13 companies tracked by StockStory beating revenue consensus estimates by 4.4% on average and issuing next-quarter revenue guidance 3.7% above expectations. Applied Industrial posted revenues of $1.25 billion, up 7.3% year-on-year and 2.2% above analyst forecasts, though it delivered the weakest guidance update among its peers. Arrow Electronics was the standout performer, with revenues surging 39% to $9.47 billion, exceeding estimates by 12.9% and providing the highest guidance raise. ESCO reported revenues of $309.3 million, up 33.5% but missing estimates by 3.4%, making it the weakest performer against analyst expectations. Share prices across the group have risen an average of 16.7% since the latest earnings results.