ARROW ELECTRONICS, INC. (ARW): what the price assumes

In the published model solve dated 2026-Q2, anchored at $215.97, ARROW ELECTRONICS, INC. (ARW) is priced for -4.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/ARW

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Arrow is a distributor, so it takes a thin slice of an enormous number: the operating margin runs about 2.8% on roughly $33.5 billion of revenue, which makes a small move in either direction very large in dollars.
• Global components is the bigger half at about 70% of revenue, and the 10-K expects that demand for components will continue to gradually increase aided by the market focus on AI technology.
• The share count has shrunk about 6.9% a year over the last four years, carried alongside about $2.2 billion of net debt, so per-share results have had a tailwind the operating business did not have to supply.

Bull Case

What today's price asks for is modest. At about 15 times operating income, the market is paying for company-wide operating profit to grow around 5% a year across a five-year stage and then settle into an ordinary pace. For a business coming out of a components downturn, that is a low bar. The most recent quarter cleared it by a distance.

Revenue rose 39% on the year to $9.5 billion in the March quarter, with Global Components and Global ECS each growing about 39%, and segment operating income of $363.5 million in components and $103.7 million in enterprise computing. Set that against a 2025 in which the whole company's reported operating margin was 2.7% of sales, and the shape of the recovery is not subtle.

Components is where the swing happens. Reported operating income in that segment was $775 million in 2025 against $741 million in 2024, on 3.6% of segment sales versus 3.7% a year earlier, which says the improvement came through volume rather than through price. The 10-K is direct about the driver, noting that both the Asia/Pacific and Americas regions saw an increase in sales compared to the year-earlier period and that the company anticipates that demand for components will continue to gradually increase aided by the market focus on AI technology.

Distribution gets underrated because the profitability looks thin on the page. The slice is not the point; the turn is. Arrow buys inventory, holds it briefly, sells it, and the return on the capital committed depends on how often that cycle repeats in a year. What protects the position is that no chip maker can afford to be left out of the catalogue and no engineer wants to manage a thousand supplier relationships directly. The filing reports that no single supplier accounted for more than 8% of consolidated sales in 2025, which is the concentration profile of a genuine intermediary rather than a reseller fronting for one vendor.

Among the listed peers the conversion is competitive. AVNET (AVT) turns about 2.27% of its $24.96 billion of revenue into operating profit, Ingram Micro (INGM) about 1.66% of $54.24 billion, and TD SYNNEX (SNX) about 2.57% of $69.77 billion. Arrow sits above all three on the same measure, which is what a mix weighted toward components and value-added engineering work looks like when it is working.

And the equity has been shrinking throughout. The company repurchased 1.3 million shares for $149.9 million in 2025 and 2.0 million shares for $250.0 million in 2024, with $172.9 million still authorized under a program that has no expiration date. Over four years the share count has fallen about 6.9% a year. In a cyclical business, buying your own stock through the trough is the version of capital allocation that actually compounds, and it is the version most cyclical managements skip.

Bear Case

Everything here is a bet on where the cycle is, which is why the valuation approaches split so neatly. The ones that value Arrow on what it has already earned find it dear: the price sits about 41% above the earnings-power methods and about 30% above the asset-value methods. The ones that project find it cheap, with the price about 39% below the forward-looking cash-flow methods and about 57% below the peer-multiple methods, largely by carrying this cycle's rate of improvement forward. For a distributor the conservative reads are usually the more honest ones, because the cycle is the whole story and extrapolating the good part of it is precisely the error this sector punishes.

Underneath the disagreement sits one structural fact. The operating margin is about 2.8%. On roughly $33.5 billion of revenue, a hundred basis points of erosion in what Arrow keeps on each sale, or a hundred basis points of cost creep, is more than a third of all the operating profit there is. The filing describes the pressure without decoration, naming competition from national distributors and smaller specialists that creates pricing and margin pressure.

Demand is not contracted, either. The 10-K says the quiet part in plain sight: conditions outside the company's control may cause customers to cancel, reduce, or delay orders that were previously made. A distributor is the party holding the inventory when that happens. The write-downs on the wind-down of businesses, $60.6 million in 2024 against a $10.3 million recovery in 2025, are the accounting record of what a demand air pocket costs once it arrives.

The balance sheet is not a problem today, but it is not spare capacity either. Net debt is about $2.2 billion, roughly 2.45 times operating profit. That is manageable while operating profit is climbing. It is a different number at a cyclical trough, because the denominator in a distributor's leverage ratio is the most volatile figure on the page.

The bull's answer to all of this is that the recovery is real and the backlog supports it, and for now that answer is holding. The harder question is what the enterprise computing half is worth. Global ECS is about 30% of revenue and sells much the same infrastructure hardware and software that everyone else in the channel sells. CDW (CDW) turns about 7.29% of revenue into operating profit and INSIGHT ENTERPRISES (NSIT) about 4.19%, both ahead of what Arrow's blended business achieves, and both are chasing the same reseller and end-customer relationships. Buying components distribution and getting enterprise reselling attached to it is not obviously a bargain at any price.

Valuation

Price a distributor and you are pricing a cycle, so the question is which part of the cycle is already in the number. At about 15 times operating income, today's price embeds company-wide operating profit growing around 5% a year across a five-year stage before settling to an ordinary long-run pace. Against Arrow's own record that is unremarkable, and against the peer group the multiple sits in the lower part of the range rather than at the top of it.

The methods split cleanly along one line: what the company already has versus what it is going to get. The price sits about 41% above the earnings-power methods and about 30% above the asset-value methods, both of which read Arrow on trailing profitability and book equity. It sits about 39% below the forward-looking cash-flow methods and about 57% below the peer-multiple methods, both of which credit the recovery already visible. That is the ordinary signature of a cyclical at an inflection. The backward-looking lenses call it fully valued, the forward-looking ones call it cheap, and which is right is a question about the durability of the upturn rather than about the arithmetic.

In operating terms the requirement is narrow. Consolidated sales were $30,853 million in 2025 against $27,923 million in 2024. Global components carried $775 million of operating income on 3.6% of segment sales, against $741 million a year earlier. Company-wide, the reported operating margin came to 2.7% of sales. What the price needs is for that thin conversion to hold while volume grows. It does not need the business model to be re-rated.

Among the distribution peers, Arrow's position is respectable on conversion and unremarkable on scale. AVNET (AVT) turns about 2.27% of $24.96 billion of revenue into operating profit, Ingram Micro (INGM) about 1.66% of $54.24 billion, and TD SYNNEX (SNX) about 2.57% of $69.77 billion. The differences are small in percentage points and enormous in dollars, which is the whole nature of the trade.

The balance sheet frames the downside rather than the upside. Net debt of about $2.2 billion is roughly 2.45 times operating profit, comfortable at this level of earnings and considerably less so at a trough. What has been doing the work for shareholders in the meantime is the share count, down about 6.9% a year over the last four years, with $172.9 million still authorized under a repurchase program carrying no expiration date. In a business where the operating margin is under three cents on the dollar, retiring roughly a quarter of the equity is not a footnote.

Catalysts

The March quarter reset the trajectory. Revenue rose 39% on the year to $9.5 billion, ahead of the company's own guidance range, with Global Components and Global ECS both growing about 39%. Segment operating income came in at $363.5 million in components and $103.7 million in enterprise computing. Management attributed the swing to a broad recovery in component demand and to AI and data-centre spending flowing through the enterprise computing business.

The guidance for the June quarter keeps the pace. Management pointed to Global Components sales of $6.80 billion to $7.20 billion and Global ECS sales of $2.35 billion to $2.55 billion, with GAAP diluted earnings per share of $3.91 to $4.11. That is the first genuinely comparable test of whether March was a restocking quarter or a trend, and it is the next thing due.

Management also said backlog visibility now extends into the third and fourth quarters. That is the specific claim to test rather than to accept. Backlog in components distribution is a soft commitment, and the 10-K is explicit that customers can cancel, reduce, or delay orders that were previously made. The distance between a backlog that converts and one that evaporates is the same distance as the one between the forward-looking methods being right about this company and the backward-looking ones being right.

Peer Cohorts (Per Segment, With Filing Citations)

Global Components (reported)

• AVT (AVNET, INC.)
• FY2025 10-K: …systems and other measures to mitigate the impact of tariffs, including selective supply chain, logistics, and pricing actions. The Company also has contingency plans to respond to a range of economic scenarios. The Company's management continues to monitor and evaluate the changing tariff situation, as well as the…
• FY2025 10-K: …appearing in Item 8 of this Annual Report on Form 10-K. Electronic Components Avnet's EC operating group primarily supports high and medium-volume customers. It markets, sells, and distributes electronic components from many of the world's leading electronic component manufacturers, including semiconductors, IP&E…
• WCC (WESCO International, Inc.)
• FY2025 10-K: …We may be unable to pass through incremental costs to customers in a timely manner or at all without adversely affecting our price competitiveness or margins. If we are unable to adjust pricing, sourcing or inventory strategies effectively, or if customers reduce or defer purchases (including due to demand…
• FY2025 10-K: …ways that we currently cannot predict. Certain geopolitical conflicts, and resulting international responses, have contributed to further volatility and uncertainty in the global financial and commodities markets, resulting in fluctuations in oil and commodity prices. There can be no assurance that economic and…
• SNX (TD SYNNEX CORPORATION)
• FY2025 10-K: …to undergo, consolidation. We have participated in this consolidation and expect to continue to assess opportunities. We also compete against companies who participate within the hyperscale computing infrastructure market including Jabil Inc., Celestica, Flex Ltd., Quanta Computer Inc. and Wiwynn Corporation. As we…
• FY2025 10-K: …are evaluated on an individual basis. 58 Table of Contents The Company has uncommitted accounts receivable purchase agreements with global financial institutions under which trade accounts receivable of certain customers and their affiliates may be acquired, without recourse, by the financial institutions. Available…
• INGM (Ingram Micro Holding Corp)
• FY2025 10-K: …sales operations, field sales and marketing personnel. As of December 27, 2025, we had approximately 9,800 associates in our sales and marketing organizations spanning all global regions. International Operations Approximately 66%, 66% and 64% of our consolidated net sales for Fiscal Year 2025, Fiscal Year 2024 and…
• FY2025 10-K: …any supply constraints can disrupt our global operations. Disruptions in local or international supply chains can cause significant delays, impacting inventory levels across our facilities. Supply chain constraints can also cause product prices and related fulfillment expenses to increase as well as prices we charge…
• DXPE (DXP Enterprises, Inc.)
• FY2025 10-K: …provides investors with additional understanding of the factors and trends affecting our business than could be obtained absent these disclosures. Refer to the Non-GAAP Financial Measures and Reconciliation section below for detailed reconciliations of our non-GAAP financial measures. Matters Affecting Comparability…
• FY2025 10-K: …Certain reclassifications were made to the prior year's consolidated financial statements to conform to the current year presentation. Such reclassifications did not have a material effect on our consolidated statements of operations and comprehensive income, balance sheets, cash flows or equity. Business…

Global ECS (reported)

• SNX (TD SYNNEX CORPORATION)
• FY2025 10-K: …that focus on the sale and promotion of products and services of selected suppliers or for specific end-market verticals. These specialists are also directly involved in establishing new relationships with leading OEM suppliers to create demand for their products and services and with resellers for their customers'…
• FY2025 10-K: …and networking solutions built specific to our customers' workloads and data center environments. We combine our core strengths in distribution with demand generation, supply chain management and design and integration solutions to help our customers achieve greater efficiencies in time to market, cost minimization,…
• INGM (Ingram Micro Holding Corp)
• FY2025 10-K: …sectors and our business. Increasing attention to environmental, social, and governance ("ESG") matters, including evolving and sometimes conflicting expectations and regulatory requirements, may subject us to unforeseen liability or cause harm to our reputation. Various stakeholders, including lenders, customers,…
• FY2025 10-K: …or are in the process of being registered, in the United States and various other countries. Even though our marks are not registered in every country where we conduct business, in many cases we have acquired rights in those marks because of our continued use of them. Human Capital Resources As of December 27, 2025,…
• CNXN (PC CONNECTION, INC.)
• FY2025 10-K: …​ Enterprise Solutions Segment. Through our custom-designed Web-based system, we are able to offer our larger corporate customers an efficient and effective method of sourcing, evaluating, purchasing, and tracking a wide variety of IT products and services. Our strategy is to be the primary single source procurement…
• FY2025 10-K: …providers. Although brand names and individual product offerings are important to our business, we believe that competitive products are available in substantially all of the merchandise categories offered by us. ​ DISTRIBUTION ​ We fulfill orders from customers both from products we hold in inventory and through…
• NSIT (INSIGHT ENTERPRISES, INC.)
• FY2025 10-K: …Committee, the purchase price of shares offered under the ESPP is an amount equal to 95 % of the fair market value of the common stock on the date of purchase. The ESPP is designed to comply with Section 423 of the Internal Revenue Code (the "IRC"), and thus is eligible for the favorable tax treatment afforded by…
• FY2025 10-K: …portfolio of solutions, far-reaching partnerships and 37 years of broad IT expertise. We amplify our solutions and services with global scale, local expertise and our e-commerce experience, enabling our clients to realize their digital ambitions in multiple ways. Our company is organized in the following three…
• PLUS (ePlus inc.)
• FY2025 10-K: …services, across the technology spectrum. We possess top-level engineering certifications with a broad range of leading IT technologies that enable us to offer multi-vendor IT solutions that are optimized for each of our customers' specific requirements. Underpinning the broader areas of cloud, security, AI,…
• FY2025 10-K: VA) for Collaboration Spaces. e Plus AVA TM uses robotic process automation accompanied by e Plus Managed Services to present an exceptional experience for users in video-enabled conference rooms and workspaces. ● Enhanced Maintenance Support (EMS) or e Plus Lifecycle-Services Support (ELSS) simplifies our customers…
• CDW (CDW CORP)
• FY2025 10-K: …programs, such as purchase or sales rebates and cooperative advertising reimbursements. We also purchase software from major software publishers and cloud providers for resale to our customers or for inclusion in the solutions we offer. Our agreements allow us to resell cloud based solutions, software or other…
• FY2025 10-K: …have five dedicated customer channels: corporate, small business, government, education, and healthcare, each of which generated $1.7 billion or greater in Net sales in 2025. Net sales to customers in the UK and Canada combined generated $2.7 billion in 2025. We believe this diversity of customer end-markets provides…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.