As of August 29, 2025, Arrow Electronics Inc's estimated intrinsic value ranges from $99.59 to $285.41 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $175.80 | +38.6% |
| Discounted Cash Flow (5Y) | $118.94 | -6.2% |
| Dividend Discount Model (Multi-Stage) | $99.59 | -21.5% |
| Dividend Discount Model (Stable) | $139.26 | +9.8% |
| Earnings Power Value | $285.41 | +125.1% |
Is Arrow Electronics Inc (ARW) undervalued or overvalued?
With the current market price at $126.82, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Arrow Electronics Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1 | 1.12 |
| Cost of equity | 8.4% | 11.1% |
| Cost of debt | 5.3% | 6.0% |
| Tax rate | 22.4% | 22.8% |
| Debt/Equity ratio | 0.46 | 0.46 |
| After-tax WACC | 7.1% | 9.1% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $119 | $8,769M | 82.2% |
| 10-Year Growth | $176 | $11,718M | 69.2% |
| 5-Year EBITDA | $110 | $8,303M | 81.2% |
| 10-Year EBITDA | $120 | $8,811M | 59.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,385M |
| Discount Rate (WACC) | 9.1% - 7.1% |
| Enterprise Value | $15,264M - $19,543M |
| Net Debt | $2,599M |
| Equity Value | $12,665M - $16,944M |
| Outstanding Shares | 52M |
| Fair Value | $244 - $327 |
| Selected Fair Value | $285.41 |
| Metric | Value |
|---|---|
| Market Capitalization | $6578M |
| Enterprise Value | $9178M |
| Trailing P/E | 14.08 |
| Forward P/E | 16.39 |
| Trailing EV/EBITDA | 9.00 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.46 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $52.74 |
| Discounted Cash Flow (5Y) | 25% | $29.74 |
| Dividend Discount Model (Multi-Stage) | 20% | $19.92 |
| Dividend Discount Model (Stable) | 15% | $20.89 |
| Earnings Power Value | 10% | $28.54 |
| Weighted Average | 100% | $151.83 |
Based on our comprehensive valuation analysis, Arrow Electronics Inc's intrinsic value is $151.83, which is approximately 19.7% above the current market price of $126.82.
Key investment considerations:
Given these factors, we believe Arrow Electronics Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.