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Assessing Arrow Electronics (ARW) Valuation After Recent Share Price Momentum
Simply Wall St
Reviewed by Simply Wall St
Arrow Electronics stock: recent move and key fundamentals
Arrow Electronics (ARW) has drawn closer investor attention after a recent share price move, prompting a closer look at how its current performance metrics and business profile line up for longer term holders.
See our latest analysis for Arrow Electronics.
At a share price of US$132.91, Arrow Electronics has seen firm near term momentum, with a 30 day share price return of 17.61% and a 1 year total shareholder return of 13.60%, while the 3 year total shareholder return of 0.29% suggests much flatter longer term progress.
If Arrow’s recent move has you reviewing your watchlist, this could be a useful moment to widen the net and check out high growth tech and AI stocks as potential comparison ideas.
With Arrow trading at US$132.91 and sitting above an analyst price target of US$108.25, plus an intrinsic value estimate suggesting a premium, you have to ask: is there still a buying opportunity here, or is future growth already priced in?
Most Popular Narrative: 23% Overvalued
Arrow Electronics last closed at $132.91, compared with a most widely followed fair value estimate of $108.25, putting the current price above that narrative view.
The normalization of customer inventory levels and broad-based backlog growth, especially in mass market segments, point to improving order patterns and sustainable sales momentum, increasing the likelihood of stronger operating leverage and earnings growth as volumes return across regions.
Curious what kind of revenue path and margin profile sits behind that fair value, and how earnings and share count assumptions fit together? The narrative spells out a detailed road map for how Arrow could get there, including how much profit power is being penciled in a few years from now and what kind of earnings multiple that might support.
Result: Fair Value of $108.25 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, there are still pressure points, including potential distributor disintermediation and uneven demand recovery, that could challenge revenue, margins and the current valuation story.
Find out about the key risks to this Arrow Electronics narrative.
Another view on Arrow’s valuation
That narrative-based fair value of $108.25 paints Arrow as 23% overvalued, yet the current P/E of 14.4x looks quite different. It sits below peers at 18.9x and below a fair ratio of 17.7x. This points to less valuation risk than the headline discount suggests. Which signal appears more relevant?
See what the numbers say about this price — find out in our valuation breakdown.
Build Your Own Arrow Electronics Narrative
If you see Arrow’s story differently or prefer to test your own assumptions against the numbers, you can sketch out a complete narrative in minutes, starting with Do it your way.
A great starting point for your Arrow Electronics research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
Looking for more investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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About NYSE:ARW
Arrow Electronics
Provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
Fair value with mediocre balance sheet.
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MPAA often has inventory and core-related timing issues. While this quarter’s problems may ease, similar issues have recurred historically and can persist for several quarters. It's not a one-off, it's a structural part of their business. Core returns are simply estimates: How many customers will actually return the original part; how quickly they'll do so; how many are useable; what they're worth, etc. MPAA predicts X sales in a quarter and Y core returns and its reserves, inventory values, etc. are based on that. If they expect a 90% core return rate and only 80% come back it doesn't change cash but they have to write down inventory and increase cost of goods sold which impacts EPS. They've also cited inventory buildup at key customers multiple times in the past. The assumption the latest backlog will all shift into future quarters this year with no impact on pricing, etc. seems more like wishful thinking. Retailer X was slated to buy $10m in parts this quarter but finds they have a lot more inventory on hand than they anticipated so they pushed the order. Realistically there are likely to be SKU cuts, reduction in safety stock on others, etc. Assuming that all $10m will come in this year plus the regular replenishment seems pretty unrealistic. MPAA also has a shaky track record when it comes to new lines and the supposed impact on business. If you look at the EV testing solutions hype back around 2020 that was supposed to diversify them beyond traditional reman and be a higher margin business that would grow with EV adoption. But it has never turned into a material contributor. The debt reduction and stock buy backs are meaningful but IMHO this narrative takes a very optimistic view of things.
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The problem with your reasoning is, that 37 Moz are AgEq. If you read the FS, you'll find out that annual silver production is more around 14-15 Moz. But at the time of the FS, that 37 Moz AgEq was a number that came of a formula (which is specified in the FS), being a mix of four metals: Ag, Au, Pb and Zc. But now, beginning of 2026, the spotprices of silver and gold have risen so much in comparison to Pb and Zc prices, that you need to recalculate the AgEq number of 37 Moz according to the recent prices. This will result in the fact that silver and gold hold more value in that mix of four metals, and thus dragg the 37 Moz AgEQ number down to somewhere around 18 Moz AgEq. The more valuable silver and gold become, the lower the AgEq number will get, but it'll never get under the yearly average production of silver, which should be somewhere between 14-15 Moz Ag in the first four years. So in short, with this in mind, your fair value is rather around CA$ 50, even with silver at 300 usd an ounce. But a more prudent stockprice forecast is around CA$ 20 and hopefully going toward CA$ 30. So DSV is a top stock, because it's producing actual gold every quarter. But don't put your hopes too high.
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