Arrow Electronics, Inc. (ARW) recently announced to have acquired Asset Recovery Corporation. This was done with the clear intent of proliferating the company’s North American market share and diversifying its services portfolio.
Asset Recovery Corp., which retains its reputation of being a worldwide leader in providing a wide range of electronics asset disposition (EAD) services, is currently contemplating to attain sales of $20 million in 2012. The company primarily caters to customers in the retail, manufacturing, healthcare, finance, and transportation industries.
Acquiring EAD service providers has become an ongoing trend for Arrow. Not long ago, the company finished its acquisition of Texas-based TechTurn, Ltd. and Flection Group B.V. for asset disposition services in Europe. These recent acquisitions mark a continual trend of technology and product advancements for Arrow which is highly commendable.
During 2011, the plethora of acquisitions enabled the company to attain a favorable net cash from operations worth approximately $121 million. This depicts that the current acquisition shall also have a positive effect on the cash flow situation of the company apart from directly ameliorating its products and technicalities.
Arrow currently faces ominous competition from major players of the industry which include Avnet, Inc. (AVT), Anixter International (AXE) and Wesco International Inc. (WCC). In order to retain its position in the global market, it is imperative that the company continues to make such momentous undertakings, keeping in mind the betterment of the organization in both the long and short run.
We currently have a Zacks Consensus Estimate of $1.07 per share for the first quarter of 2012 and $4.93 per share for full year 2012. We continue to maintain a Neutral recommendation on Arrow. In the short run, our view is supported by a Zacks #3 Rank on the stock which translates into a short-term rating of Hold.
ARROW ELECTRONI (ARW): Free Stock Analysis Report
AVNET (AVT): Free Stock Analysis Report
ANIXTER INTL (AXE): Free Stock Analysis Report
WESCO INTL INC (WCC): Free Stock Analysis Report
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