Yahoo Finance Flex (FLEX) Up 14.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Flex (FLEX). Shares have added about 14.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Flex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
FLEX Q4 Earnings and Revenues Beat Estimates
Flex reported fourth-quarter fiscal 2023 adjusted earnings of 57 cents per share, beating the Zacks Consensus Estimate by 11.8%. The bottom line grew 9.6% year over year.
Revenues increased 9% year over year to $7.5 billion, surpassing the consensus mark by 4.1%. The company benefited from strength across the Agility Solutions and Reliability Solutions segments.
Segment Details
The Flex Reliability Solutions Group comprises Health Solutions, Automotive and Industrial businesses. Revenues improved 14% year over year to $3.2 billion. Demand remained healthy across the business segment, partly offset by the semiconductor shortage.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute or CEC and Lifestyle and Consumer Devices businesses.
Revenues were up 5% year over year to $3.7 billion. Momentum in CEC business and cost saving efforts across Lifestyle and Consumer Devices business were the driving factors.
The Nextracker Group’s revenues rose 18% year over year to $0.5 billion.
Operating Details
Non-GAAP gross margin increased 60 bps on a year-over-year basis to 7.9% in the reported quarter.
Non-GAAP selling, general & administrative expenses, as a percentage of revenues, were 3.1%, which increased 10 bps from the prior-year period.
Non-GAAP operating margin expanded 60 bps year over year to 4.9%.
Adjusted operating margins of the Flex Agility Solutions Group and the Nextracker Group were 4.6% and 13.5%, up 40 bps and 850 bps, respectively, year over year. The Flex Reliability Solutions Group’s adjusted operating margin was 4.4%, down 50 bps.
Balance Sheet & Cash Flow
As of Mar 31, cash & cash equivalents totaled $3.29 billion compared with $2.57 billion as of Dec 31, 2022.
As of Mar 31, total debt (net of current portion) were $3.69 billion compared with $3.52 billion as of Dec 31, 2022.
In fourth-quarter fiscal 2023, the company generated cash flow from operating activities of $450 million and an adjusted free cash flow of $270 million.
In the quarter under review, FLEX repurchased shares worth $44 million.
Guidance
For first-quarter fiscal 2024, Flex expects revenues to be between $7 billion and $7.5 billion.
Management expects adjusted earnings in the range of 47-53 cents per share. Adjusted operating income is projected to be between $320 million and $350 million.
For fiscal 2024, Flex expects revenues to be between $30.5 billion and $31.5 billion. It anticipates adjusted earnings in the range of $2.35-$2.55per share. Adjusted operating margin is projected in the range of 4.9-5.1%
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -13.89% due to these changes.
VGM Scores
At this time, Flex has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Flex has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Flex belongs to the Zacks Electronics - Miscellaneous Products industry. Another stock from the same industry, Trimble Navigation (TRMB), has gained 8.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Trimble reported revenues of $915.4 million in the last reported quarter, representing a year-over-year change of -7.9%. EPS of $0.72 for the same period compares with $0.73 a year ago.
For the current quarter, Trimble is expected to post earnings of $0.60 per share, indicating a change of -6.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Trimble. Also, the stock has a VGM Score of C.
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Flex Ltd. (FLEX) : Free Stock Analysis Report
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