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Will This Analyst Downgrade Hurt Arrow Electronics (ARW) Stock Today?

NEW YORK (TheStreet) -- Goldman Sachs downgraded Arrow Electronics (ARW - Get Report) to "neutral" from "buy" and set a $59 price target. The firm said increased inventory across the industry could hurt margins.

The stock closed at $60.72 on Friday.

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Separately, TheStreet Ratings team rates ARROW ELECTRONICS INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ARROW ELECTRONICS INC (ARW) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, attractive valuation levels and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 42.2% when compared to the same quarter one year prior, rising from $89.94 million to $127.88 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 7.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 47.67% and other important driving factors, this stock has surged by 27.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ARW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ARROW ELECTRONICS INC has improved earnings per share by 47.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARROW ELECTRONICS INC reported lower earnings of $3.85 versus $4.58 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $3.85).
  • You can view the full analysis from the report here: ARW Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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