I am concerned about several issues despite the low price and valuation. Besides the low PE (about 5X), the price of the stock is about 1/2 the book value. Ordinarily, this might be enticing, especially since the company doesn't have a ton of debt relative to equity (or even tangible equity), but these aren't ordinary times. On the supplier side, many of its customers are in trouble, some signficantly. KEM is one that comes to mind, but the entire semiconductor universe is in sharp retreat. Looking at the balance sheet, ivnentories represent 1/2 the equity value of the company, and prices are coming down fast. Even more alarming, the company acts as a bank to its resellers. AR is over 3/4 of book value. Just as in prior downturns, the company's earnings could plunge. With such low margins even in ordinary times, it is possible that they could go negative. Peer ARW is in trouble as well, as are some smaller rivals.
