IX, ARW, DBI: Zacks Rank #1 Value Picks for July 2026

Value rotation accelerates as ORIX Corporation (IX), Arrow Electronics (ARW), and Designer Brands (DBI) surface among the best value stocks July 2026 has produced, all carrying Zacks Rank #1 (Strong Buy) designations.

ARW stock posted Q1 2026 revenue of $9.5 billion, up 39% year-over-year, with non-GAAP EPS of $5.22 beating estimates by 85%
DBI stock gross margin expanded 240 basis points to 45.3% in Q1 2026, flipping adjusted EBIT from a $1.1 million loss to a $19.4 million profit
ORIX Corporation reported record fiscal 2026 net income of ¥447.3 billion, up 27.2%, and authorized repurchase of up to 9.1% of shares outstanding

Lead

A broadening equity market rotation away from mega-cap technology names and into overlooked cyclicals and financials has propelled three Zacks Rank #1 (Strong Buy) names into focus in the third week of July 2026. Arrow Electronics (ARW), ORIX Corporation (IX), and Designer Brands (DBI) each carry strong Zacks Rank #1 value scores underpinned by earnings revisions, balance-sheet discipline, and depressed multiples — precisely the combination that defines the current rotation phase. Value stocks as a cohort have outperformed the S&P 500 by approximately 2.6% over recent weeks, while the Russell 2000 has advanced 22.6% in the first half of 2026 — its best H1 performance since 1991.

What Is Driving the Rotation

Investor positioning has shifted materially as semiconductor stocks — nearly 20% of S&P 500 weighting — entered a drawdown of roughly 20% after a powerful first-half run. Capital flowed into sectors trading at discounts to historical averages: financials, energy, healthcare, and consumer staples. Earnings revision momentum, the primary screen behind Zacks methodology, has been strongest in exactly these pockets, giving the screening model a concentrated list that includes industrials-adjacent distributors, diversified financial conglomerates, and specialty retail turnarounds. The three names below represent the breadth of that rotation.

Arrow Electronics (ARW): AI Distribution Tailwinds

Arrow Electronics reported Q1 2026 net sales of $9.48 billion, a 39% year-over-year increase and above the high end of its own guidance. Net income reached $235.1 million, up from $79.7 million a year earlier, as non-GAAP diluted EPS surged to $5.22 — roughly 190% above the prior-year quarter and nearly double the consensus estimate of $2.82. Operating margin in the Global Components segment expanded 160 basis points to 4.2%, driven by a strategic pivot toward higher-margin value-added services in artificial intelligence infrastructure and data-center buildout. ARW stock carries a Zacks Value grade supported by its market capitalization of approximately $11.6 billion relative to underlying cash generation. For Q2 2026, management guided Global Components revenue growth of 29% to 36% year-over-year, with non-GAAP diluted EPS in the range of $4.32 to $4.52. The company generated $700 million in operating cash flow in the first quarter alone and repurchased $25 million in shares during the period.

Designer Brands (DBI): Margin Recovery in Footwear

Designer Brands, owner of the DSW and Vince Camuto brands among others, delivered Q1 2026 net sales of $696.4 million, a 1.4% year-over-year gain, while total comparable sales declined 1.1% — a narrowing trend relative to prior quarters. The headline turnaround was in profitability: gross margin expanded 240 basis points to 45.3%, with adjusted EBIT swinging from a loss of $1.1 million to a profit of $19.4 million. The Brand Portfolio segment — which houses owned wholesale brands — saw net sales climb 19.4%, providing operating leverage that offset softness in retail. DBI stock trades near $5.25, within a 52-week range of $2.55 to $9.17, and carries a dividend yield of 3.5% — standing well above its industry peer average. Full-year 2026 guidance calls for diluted EPS of $0.28 to $0.38, with management signaling results toward the high end of that range. Debt has been trimmed to $475.3 million, and Zacks consensus earnings estimates have risen 8.6% over the past 60 days — a key driver of the Zacks Rank #1 designation. At current valuations, the stock prices in a recovery that has materially begun.

ORIX Corporation (IX): Record Profits and Capital Returns

ORIX Corporation, the Tokyo-based diversified financial services group listed on the NYSE as IX, posted record net income of ¥447.3 billion for the fiscal year ended March 31, 2026 — a 27.2% increase and the third consecutive annual profit record. Total revenues rose 16% to ¥3,330.8 billion, operating income climbed 37.5%, and basic earnings per share reached ¥400.27 versus ¥307.74 the prior year. The result exceeded the company's own revised target of ¥440 billion.

The board approved an annual dividend of ¥156.10 per share — a record — and authorized buyback of up to approximately 9.1% of shares outstanding. IX trades at a price-to-book ratio of 1.06 against an industry average of 2.98, and a price-to-sales ratio of 1.93. Zacks consensus earnings estimates for the current fiscal year have risen 55.7% over the past 60 days, reflecting strong earnings momentum into 2027. The dividend yield of 1.5%, combined with the buyback authorization, underscores management's confidence in the capital structure. IX holds a Zacks Value grade of A.

Zacks Methodology in the Rotation Context

The Zacks Rank #1 value screen identifies names where both upward earnings revision momentum and attractive valuation multiples converge. In the current market environment — defined by a rotation out of richly valued technology leaders and into underappreciated cyclicals and global financials — that methodology is surfacing names with self-reinforcing catalysts: estimate upgrades that themselves attract institutional interest, tightening valuation gaps, and improving price momentum. The three stocks identified here span distinct sectors: industrial distribution, specialty retail, and diversified financials, suggesting the value rotation is not sector-confined.

Outlook

The best value stocks July 2026 has featured share a common thread: earnings revisions trending sharply higher against still-modest valuations, with capital return frameworks that sustain investor interest even if macro conditions moderate. ARW stock is positioned as a direct beneficiary of sustained AI infrastructure spending; DBI stock is executing a margin recovery that the market has yet to fully re-rate; and ORIX (IX) offers record profit growth at a valuation well below its financial-sector peers. The rotation thesis depends on continued relative underperformance of concentrated mega-cap technology positions — a dynamic that, by mid-July 2026, shows little sign of abating.

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Mentioned tickers: IX, ARW, DBI