Arrow Electronics Attains New 52-Week High: Here Is Why

Shares of electronic component distributor Arrow Electronics (NYSE:ARW) scaled a new 52-week high of $67.99 on Jun 8, eventually closing at $67.70. The closing share price represents a year-to-date return of nearly 25%. The average trading volume over the last three months aggregated roughly 582.32K shares.

Moreover, Arrow’s shares have gained 14.3% since the release of better-than-expected first-quarter 2016 results on May 3. Both the year-over-year comparisons and the book-to-bill ratio were favorable.

Arrow’s strong distribution channels are being preferred by original equipment manufacturers, contract manufacturers and commercial customers for marketing. The company’s core strength in providing best-in-class services and easy-to-acquire technologies will act as the growth catalysts, going forward.

Moreover, the company has secured a significant market share through a broad portfolio of products and services, and continued efforts to maximize consumer satisfaction. Additionally, incremental sales from strategic acquisitions are expected to boost Arrow’s top line, going forward. Notably, the company acquired four businesses in 2015, namely ATM Electronic Corporation, immixGroup Inc., RDC and Data Modul AG.

Additionally, Arrow Electronics provided an encouraging guidance. For the second quarter of 2016, the company expects sales to range between $5.825 billion and $6.225 billion.

Global components sales are projected in the range of $3.75 billion to $3.95 billion. Global enterprise computing solutions sales are estimated to be $2.075–$2.275 billion. The company expects non-GAAP earnings per share in the range of $1.59 to $1.71.

However, a significant portion of the company’s revenues comes from the sale of semiconductors, which is a cyclical industry characterized by changes in technology and manufacturing capacity and subject to significant market upturns and downturns. Moreover, uncertain economic conditions, high debt burden and competition from Avnet (NYSE:AVT) and Ingram Micro (NYSE:IM) remain concerns.

Currently, Arrow has a Zacks Rank #3 (Hold). A better-ranked stock in the broader technology sector is Anixter International Inc. (NYSE:AXE) , sporting a Zacks Rank #1 (Strong Buy).