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Plexus (PLXS) Up 0.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Plexus (PLXS - Free Report) . Shares have added about 0.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Plexus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Plexus Q3 Earnings Beat Estimates, Revenues Up Y/Y
Plexus reported third-quarter fiscal 2020 adjusted earnings of $1.20 per share that beat the Zacks Consensus Estimate by 60%. Moreover, the figure jumped 48.1% year over year.
Revenues of $857.4 million beat the consensus mark by 7%. The figure also increased 7.2% year over year due to robust performance in Healthcare/Life Sciences and Industrial/Commercial sectors and higher Asia-Pacific (APAC) and Europe, the Middle East and Africa (EMEA) revenues.
APAC revenues increased 25.2% year over year to $482 million. Moreover, EMEA revenues were $92 million, up 13.6%. However, Americas revenues declined 16.6% to $306 million.
Plexus won 35 manufacturing contracts during the quarter, worth $252 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $868 million in annualized revenues.
Market Sector Details
Industrial/Commercial revenues grew 27.8% year over year to $317 million and accounted for 37% of total revenues.
Healthcare/Life Sciences revenues climbed 6.8% from the year-ago quarter to $330 million. The sector accounted for 38.5% of total revenues.
However, Aerospace/Defense revenues decreased 6.6% year over year to $141 million and accounted for 16.4% of total revenues.
Communications accounted for 8% of total revenues. Revenues from the sector decreased 25% year over year to $69 million.
Notably, top 10 customers of the company accounted for 56% of net revenues.
Operating Details
Gross profit on a GAAP basis increased 16.7% year over year to $82.9 million. Gross margin expanded 80 basis points (bps) year over year to 9.7%.
Selling and administrative expenses (4.3% of revenues) increased 1.1% from the year-ago quarter to $37 million.
Plexus reported adjusted operating income of $45.9 million, up 33.3% year over year. Adjusted operating margin expanded 100 bps on a year-over-year basis to 5.3%, driven by strong operating performance and lower U.S. healthcare costs.
Balance Sheet & Cash Flow
As of Jul 4, 2020, Plexus had cash & cash equivalents worth $296.5 million compared with $225.8 million as of Apr 4, 2020.
Moreover, as of Jul 4, 2020, the company had a long-term debt of $188.6 million compared with $186.3 million as of Apr 4, 2020.
In third-quarter fiscal 2020, cash flow used by operations was $47 million. The company reported free cash flow of $37 million.
ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 12.9% for third-quarter fiscal 2020. Plexus’ weighted average cost of capital was 400 bps above fiscal 2020 WACC of 8.8%.
Guidance
For fourth-quarter fiscal 2020, revenues are projected between $850 million and $890 million. Volatile end-markets remain a headwind for Plexus’ top-line growth. However, strength in Healthcare/Life Sciences, semi-cap and defense end-markets are positive.
Gross margin is expected in the range of 9.1%-9.5%. GAAP operating margin is expected between 4.8% and 5.2%.
GAAP earnings are expected between $1.05 and $1.20 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 18.5% due to these changes.
VGM Scores
Currently, Plexus has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Plexus has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Plexus (PLXS) Up 0.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Plexus (PLXS - Free Report) . Shares have added about 0.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Plexus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Plexus Q3 Earnings Beat Estimates, Revenues Up Y/Y
Plexus reported third-quarter fiscal 2020 adjusted earnings of $1.20 per share that beat the Zacks Consensus Estimate by 60%. Moreover, the figure jumped 48.1% year over year.
Revenues of $857.4 million beat the consensus mark by 7%. The figure also increased 7.2% year over year due to robust performance in Healthcare/Life Sciences and Industrial/Commercial sectors and higher Asia-Pacific (APAC) and Europe, the Middle East and Africa (EMEA) revenues.
APAC revenues increased 25.2% year over year to $482 million. Moreover, EMEA revenues were $92 million, up 13.6%. However, Americas revenues declined 16.6% to $306 million.
Plexus won 35 manufacturing contracts during the quarter, worth $252 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $868 million in annualized revenues.
Market Sector Details
Industrial/Commercial revenues grew 27.8% year over year to $317 million and accounted for 37% of total revenues.
Healthcare/Life Sciences revenues climbed 6.8% from the year-ago quarter to $330 million. The sector accounted for 38.5% of total revenues.
However, Aerospace/Defense revenues decreased 6.6% year over year to $141 million and accounted for 16.4% of total revenues.
Communications accounted for 8% of total revenues. Revenues from the sector decreased 25% year over year to $69 million.
Notably, top 10 customers of the company accounted for 56% of net revenues.
Operating Details
Gross profit on a GAAP basis increased 16.7% year over year to $82.9 million. Gross margin expanded 80 basis points (bps) year over year to 9.7%.
Selling and administrative expenses (4.3% of revenues) increased 1.1% from the year-ago quarter to $37 million.
Plexus reported adjusted operating income of $45.9 million, up 33.3% year over year. Adjusted operating margin expanded 100 bps on a year-over-year basis to 5.3%, driven by strong operating performance and lower U.S. healthcare costs.
Balance Sheet & Cash Flow
As of Jul 4, 2020, Plexus had cash & cash equivalents worth $296.5 million compared with $225.8 million as of Apr 4, 2020.
Moreover, as of Jul 4, 2020, the company had a long-term debt of $188.6 million compared with $186.3 million as of Apr 4, 2020.
In third-quarter fiscal 2020, cash flow used by operations was $47 million. The company reported free cash flow of $37 million.
ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 12.9% for third-quarter fiscal 2020. Plexus’ weighted average cost of capital was 400 bps above fiscal 2020 WACC of 8.8%.
Guidance
For fourth-quarter fiscal 2020, revenues are projected between $850 million and $890 million. Volatile end-markets remain a headwind for Plexus’ top-line growth. However, strength in Healthcare/Life Sciences, semi-cap and defense end-markets are positive.
Gross margin is expected in the range of 9.1%-9.5%. GAAP operating margin is expected between 4.8% and 5.2%.
GAAP earnings are expected between $1.05 and $1.20 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 18.5% due to these changes.
VGM Scores
Currently, Plexus has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Plexus has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.