Investment Thesis
Arrow Electronics operates a large revenue base with positive free cash flow generation ($667.6M), but exhibits concerning profitability metrics including weak ROE (3.5%), ROA (0.7%), and net margins (2.5%). The reported YoY revenue growth of 14,443% appears anomalous and raises data quality concerns, while net income growth of only 0.3% suggests significant margin compression or one-time items distorting reported figures.
Strengths
- Positive operating cash flow of $699.8M and strong free cash flow of $667.6M indicating underlying business cash generation
- Moderate leverage with debt-to-equity ratio of 0.35x and long-term debt of $2.4B manageable relative to equity base
- Substantial asset base of $36.0B with established market position in electronic parts distribution
Risks
- Extremely thin profitability margins (11.5% gross, 3.8% operating, 2.5% net) indicating structural low-return business model
- Critically weak return metrics with ROE of 3.5% and ROA of 0.7% suggesting poor capital efficiency
- Inadequate liquidity with current ratio of 1.24x and quick ratio of 1.02x leaving minimal buffer for disruptions; suspicious revenue growth data (14,443% YoY) creates fundamental analytical uncertainty
Key Metrics to Watch
- Net profit margin trend and operating margin sustainability
- Free cash flow maintenance and working capital efficiency (inventory and receivables turnover for distributors)
- Debt levels and interest coverage given thin operating margins
Financial Metrics
Revenue
9.5B
Net Income
235.1M
EPS (Diluted)
$4.55
Free Cash Flow
667.6M
Total Assets
36.0B
Cash
286.5M
Profitability Ratios
Gross Margin
11.5%
Operating Margin
3.8%
Net Margin
2.5%
ROE
3.5%
ROA
0.7%
FCF Margin
7.0%
Balance Sheet & Liquidity
Current Ratio
1.24x
Quick Ratio
1.02x
Debt/Equity
0.35x
Debt/Assets
0.0%
Interest Coverage
N/A
Long-term Debt
2.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T09:34:19.613491 |
Data as of: 2026-04-04 |
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