Highlights

  • Arrow Electronics shows 76.87% basic EPS growth, a P/E of 13.41 and PEG of -6.51.
  • Second quarter sales were $9,992 million, up 31.8%, with diluted EPS of $5.26.
  • Operating cash flow was $1,018 million for six months, against $146 million.
  • Management guided third quarter sales to $9.6 billion to $10.2 billion.

Growth, P/E and PEG sit side by side at Arrow Electronics (NYSE:ARW), an undervalued growth stock: basic earnings per share grew 76.87% over one year, the trailing twelve-month P/E ratio is 13.41 and the PEG ratio, on an expected basis, is -6.51, with shares trading at USD 219.57 on October 28, 2026, down 0.04%. Alongside those figures, the electronic components and enterprise computing distributor replaced its share repurchase program with a new $1.0 billion program effective May 12, 2026, and reported second quarter 2026 sales of $9,992 million and net income attributable to shareholders of $273 million in early August.

Arrow Electronics is based in Centennial, Colorado, and incorporated in New York. It sources and engineers technology for manufacturers, service providers and users of enterprise computing solutions, with revenues primarily from semiconductor products, interconnect, passive and electromechanical components, and IT hardware and software. Its two reportable segments are Global Components, which distributes electronic components primarily to original equipment and electronic manufacturing services providers, and Global ECS, which provides datacenter, cloud, security and analytics solutions.

Growth: Second Quarter Sales, Net Income and Segment Demand

Net income attributable to shareholders was $273 million in the second quarter of 2026 against $188 million a year earlier, and $508 million for the first six months against $267 million. Second quarter basic earnings per share were $5.32 against $3.62, and diluted earnings per share were $5.26 against $3.59. Non-GAAP diluted earnings per share were $5.45 against $2.43.

Consolidated sales were $9,992 million, up 31.8%, and $19,466 million for the six months, up 35.2%. Global Components sales were $7,366 million, up 39.4%, and Global ECS sales were $2,627 million, up 14.4%. The company said the Global Components increase was primarily due to demand related to sustained market strength and AI related growth. Operating income was $377 million against $191 million, up 98.0%.

Valuation: P/E of 13.41, PEG of -6.51 and Cash Generation

The P/E ratio of 13.41 is measured on trailing twelve-month earnings, and the PEG ratio of -6.51 on expected growth. Net cash provided by operating activities was $1,018 million for the first six months against $146 million, which the company attributed primarily to the timing of settlements within its Global Components supply chain services offerings and higher income from operations.

On the second quarter earnings call, interim President and Chief Executive Officer Bill Austin said book-to-bill ratios remain well above parity and backlog continues to build into 2027.

Capital and Balance Sheet: $1.0 Billion Repurchase Program and Debt

Effective May 12, 2026, the Board of Directors replaced the January 2023 repurchase program with a program of up to $1.0 billion with no expiration date. In the first six months, Arrow repurchased 0.2 million shares for $25.0 million under the January 2023 program and 0.2 million shares for $42.8 million under the May 2026 program. About $956.9 million remained available at July 4, 2026.

Cash and cash equivalents were $244.6 million at July 4, 2026, and committed and undrawn liquidity was approximately $3.5 billion. Short-term debt was $118 million and long-term debt was $2,053 million, against $3,085 million of long-term debt at December 31, 2025. Net cash used for financing activities was $981 million against $416 million.

Disclosed Risks and Outlook: Global ECS Contract Losses and Third Quarter Guidance

Global ECS gross profit included $26.6 million of losses in the second quarter and $48.3 million for the six months from underperformance of certain non-cancellable multi-year purchase obligations running through 2032, and Global ECS gross profit margin was 10.2% against 11.2%. The company said it anticipates there could be additional losses in the coming quarters and that after July 4, 2026 it took steps to terminate one of the contracts, effective in the first quarter of 2027. It also stated that it cannot predict whether stronger demand trends will continue. Arrow has accrued $24.2 million for environmental remediation at sites in Huntsville, Alabama, and Norco, California.

For the third quarter of 2026, management guided sales of $9.6 billion to $10.2 billion, with Global Components at $7.5 billion to $7.9 billion and Global ECS at $2.1 billion to $2.3 billion. It guided non-GAAP diluted earnings per share of $4.83 to $5.03, a tax rate of 23% to 25% and interest expense of approximately $50 million. The company expects capital expenditures of approximately $100.0 million for 2026.