Arrow Electronics (ARW)- How Much Fluff Was in the 62 cps Beat?

An earnings quality update on 2Q24

Our 7/18 piece Arrow Electronics (ARW)- A Follow-up to Our Red Flag Note featured a full earnings quality review of ARW. On 8/1, the company reported adjusted EPS of $2.78 – beating forecasts by 62 cents. However, our review of the quarter showed several one-time benefits we believe are unlikely to repeat. ARW does not give annual guidance but only forecasts one quarter into the future which makes it difficult to gauge changes in management sentiment via the guidance numbers alone. However, management guided to only $2.10-$2.30 for 3Q EPS. This 20% sequential decline in the outlook for 3Q may be a reflection of the unusual benefits received in 2Q24.

To assess how much of the dramatic beat came from unsustainable sources, let’s get behind the numbers…

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