Value
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.3 |
| P/S | 10.0 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.5 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 8.5x
- ▸PEG: 0.04
- ▸Attractively valued
ARW · Why this verdict
Why Arrow Electronics (ARW) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Arrow Electronics combines strong growth (32% YoY) and a cheap forward P/E of 8.7x, but quality is below the minimum bar (3.7/10) and the price already sits 4.1% above the $199.75 analyst target, leaving no upside cushion.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Arrow is growing strongly at 32% YoY, with both revenue growth and earnings growth scoring 10/10. Growth breakdown | Growth should remain above 15% YoY over the next 12 months as the distribution business keeps expanding. | →Stable |
| CounterGrowth confidence is only 0.67 and electronics distribution is highly cyclical, so a 32% rate likely reflects a cyclical upswing that can reverse quickly. | ||
Revenue is concentrated, with global components accounting for 70.0% of sales, flagged as one HIGH and one MED concentration risk. Bear case | The global components share should not rise above 70% as the business diversifies over 12 months. | ↓Deteriorating |
| CounterGlobal components is the core scale business of a distributor, and concentration there may reflect focus and purchasing leverage, not fragility. | ||
Business quality is below the 4.0 floor at 3.7/10, dragged down by gross margin (0.0), operating margin (1.6) and net margin (1.1) component scores despite a 7/9 Piotroski F-Score. Bear case | Quality score should recover above 4.0/10 if margins stabilize over the next 12 months. | ↓Deteriorating |
| CounterA Piotroski F-Score of 7/9, a moat score of 6.1 and FCF quality of 6.5 suggest the low quality score is driven by structurally thin distribution margins, not deteriorating fundamentals. | ||
The stock trades at a forward P/E of 8.7x with a PEG of 0.04, giving a value score of 8.0/10 and attractive P/E versus peers. Valuation breakdown | Forward P/E should stay below 12x as earnings hold up over the next 12 months. | →Stable |
| CounterDistributors usually trade at low multiples because of thin margins and cyclicality, so a low P/E may be the structural norm, not a bargain. | ||
The price of $208.34 is already 4.1% above the $199.75 analyst target, so reward-to-risk is negative at -0.46 against 9.0% downside to the stop. Estimated upside | Analyst targets should be raised above the current price before upside returns; otherwise returns depend on further multiple expansion. | →Stable |
| CounterAnalyst targets lag a 32% growth rate and an uptrend pullback with rising on-balance volume, so upward target revisions could quickly restore upside. | ||
Arrow is growing strongly at 32% YoY, with both revenue growth and earnings growth scoring 10/10.
→StableGrowth breakdown
- Expectation
- Growth should remain above 15% YoY over the next 12 months as the distribution business keeps expanding.
CounterGrowth confidence is only 0.67 and electronics distribution is highly cyclical, so a 32% rate likely reflects a cyclical upswing that can reverse quickly.
Revenue is concentrated, with global components accounting for 70.0% of sales, flagged as one HIGH and one MED concentration risk.
↓DeterioratingBear case
- Expectation
- The global components share should not rise above 70% as the business diversifies over 12 months.
CounterGlobal components is the core scale business of a distributor, and concentration there may reflect focus and purchasing leverage, not fragility.
Business quality is below the 4.0 floor at 3.7/10, dragged down by gross margin (0.0), operating margin (1.6) and net margin (1.1) component scores despite a 7/9 Piotroski F-Score.
↓DeterioratingBear case
- Expectation
- Quality score should recover above 4.0/10 if margins stabilize over the next 12 months.
CounterA Piotroski F-Score of 7/9, a moat score of 6.1 and FCF quality of 6.5 suggest the low quality score is driven by structurally thin distribution margins, not deteriorating fundamentals.
The stock trades at a forward P/E of 8.7x with a PEG of 0.04, giving a value score of 8.0/10 and attractive P/E versus peers.
→StableValuation breakdown
- Expectation
- Forward P/E should stay below 12x as earnings hold up over the next 12 months.
CounterDistributors usually trade at low multiples because of thin margins and cyclicality, so a low P/E may be the structural norm, not a bargain.
The price of $208.34 is already 4.1% above the $199.75 analyst target, so reward-to-risk is negative at -0.46 against 9.0% downside to the stop.
→StableEstimated upside
- Expectation
- Analyst targets should be raised above the current price before upside returns; otherwise returns depend on further multiple expansion.
CounterAnalyst targets lag a 32% growth rate and an uptrend pullback with rising on-balance volume, so upward target revisions could quickly restore upside.
Per-dimension breakdown
Quality
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.0 |
| ROA | 1.8 |
| Gross margin | 0.0 |
| Op margin | 1.6 |
| Net margin | 1.1 |
| Current ratio | 4.7 |
| FCF quality | 6.5 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Strong Piotroski F-Score: 7/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 32% YoY
Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.6 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Uptrend pullback (RSI 39) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.7 |
| erm sentiment | 5.0 |
Insider
6.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.2 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $209,850 (0.002% of mkt cap)
Peer rank
4.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.1 |
| quality rank | 3.6 |
| growth rank | 4.3 |
- ▸Attractive P/E vs peers
Technical
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.7 |
| support resistance | 7.5 |
| 52w position | 6.8 |
| gap | 5.0 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 8.3 |
| volatility | 1.8 |
| put call | 9.8 |
| implied vol | 2.3 |
| max pain risk | 3.0 |
| beta | 6.1 |
| debt equity | 8.8 |
- ▸High IV: 66%
- ▸Above max pain $175
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 2 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.5<4.5
- ASYMMETRY:-0.6=NEGATIVE
- EARNINGS_PROXIMITY:2d<=7d
Warning (0)
none
Reward-to-Risk
-0.56
Upside
-4.8%
Downside
8.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.5<4.5 outcome against Growth at 10.0 and asymmetric R:R of -0.56.
The strongest dimensions are Growth at 10.0, Value at 8.0, and Catalyst at 7.5; the weakest are Momentum at 2.5, Quality at 3.7, and Peer rank at 4.8. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of -0.56 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Yoy Growth
Trip ifRevenue growth falls below 10% YoY from current 32%.
- P2Cheap Forward Valuation
Trip ifForward P/E rises above 14x from current 8.7x.
- P3Below Floor Business Quality
Trip ifQuality score rises above 5.0/10 from current 3.7.
- P4Price Above Analyst Target
Trip ifAnalyst target rises above $230 from current $199.75.
- P5Product Concentration Risk
Trip ifGlobal components share of revenue falls below 55% from current 70%.