Arrow Electronics is the cheapest of the four big US distributors after its operating income roughly doubled
Arrow Electronics is the cheapest of the big US technology distributors on trailing earnings even as its operating income runs at roughly double its year-ago level. The gap is a price on the Dell loss and a chief-executive seat held interim for over a year, and the October 29 report plus a permanent-chief decision will test it.
Richard Tang · 2 min read
Arrow Electronics+0.01% — Arrow Electronics, up 0.01 percent today, the distributor that moves roughly $10 billion of chips, sensors and enterprise hardware a quarter, trades at the lowest earnings multiple of the four big US technology distributors 12. The discount tracks the half of the company that lost Dell this year and has worked under an interim chief executive since September 2025; operating income group-wide, most of it components, ran at roughly double its year-ago level last quarter 26. Two events will test the price: the October 29 report and the board's choice of a permanent chief 36.
Arrow carries the lowest earnings multiple of the four big US technology distributors
Data
| Value | |
|---|---|
| Arrow Electronics | 13.71x |
| TD Synnex | 15.24x |
| Avnet | 22.56x |
| WESCO International | 23.56x |
The components half is already printing the recovery
Avnet−0.80% — Avnet, down 0.80 percent today, Arrow's closest peer in component distribution, closed its fiscal fourth quarter with record sales and adjusted operating income up 122 percent, margins expanding for a fourth straight quarter 4. Book-to-bill, orders measured against shipments, ran above parity in every region 4. Arrow's own filings show the same mechanism arriving one peer over: quarterly operating income has climbed for three straight quarters and now sits at roughly double its year-ago level, on a gross margin that has barely moved in two years 2. That is volume flowing through a fixed cost base, and it came with a quarter that beat consensus and components book-to-bill above parity on demand from AI infrastructure, aerospace and defense 5.
Arrow's quarterly operating income has climbed for three straight quarters
Data
| Operating income | |
|---|---|
| Q3 '24 | $0.18B |
| Q4 '24 | $0.2B |
| Q1 '25 | $0.16B |
| Q2 '25 | $0.19B |
| Q3 '25 | $0.18B |
| Q4 '25 | $0.29B |
| Q1 '26 | $0.36B |
| Q2 '26 | $0.38B |
All of the recovery shows up below the gross line
- Gross margin
- Operating margin
Data
| Gross margin | Operating margin | |
|---|---|---|
| Q3 '24 | 11.5% | 2.6% |
| Q4 '24 | 11% | 2.7% |
| Q1 '25 | 11.4% | 2.3% |
| Q2 '25 | 11.2% | 2.5% |
| Q3 '25 | 10.8% | 2.3% |
| Q4 '25 | 11.5% | 3.4% |
| Q1 '26 | 11.5% | 3.8% |
| Q2 '26 | 11.3% | 3.8% |
The discount lives in the half that lost Dell
Arrow's enterprise computing unit, ECS, lost Dell's North American distribution business this year after a formal review 68. Raymond James+1.34% — Raymond James, up 1.34 percent today kept its Outperform rating and called the earnings effect likely immaterial, because the deal's reported $1.4 billion value was gross billings rather than revenue 8. Succession runs deeper. Eric Nowak, a 22-year Arrow veteran who runs the unit, steps down on December 31, and Rodney Clark, who ran Cisco's+0.05% — Cisco, up 0.05 percent today global partner sales and was Microsoft's−0.33% — Microsoft, down 0.33 percent today channel chief, starts on November 9 67. Above both, Bill Austen has held the chief-executive seat on an interim basis since Sean Kerins stepped down 6.
October 29 and one appointment settle the fork
Arrow reports on October 29 3. If components margin follows Avnet's expansion, the discount was a leadership discount and a permanent chief closes most of it; if gross margin stays flat while growth cools, the cheap multiple was honest. Six analysts sit in the middle at a $233.25 average target 3. On the evidence filed so far, the recovery is already in the numbers, and the vacancies are in the price.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
