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Flex Ltd. (FLEX) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Flex (FLEX - Free Report) ? Shares have been on the move with the stock up 9.7% over the past month. The stock hit a new 52-week high of $20.5 in the previous session. Flex has gained 9.6% since the start of the year compared to the -32.4% move for the Zacks Computer and Technology sector and the -37.3% return for the Zacks Electronics - Miscellaneous Products industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 26, 2022, Flex reported EPS of $0.63 versus consensus estimate of $0.51 while it beat the consensus revenue estimate by 7.87%.
For the current fiscal year, Flex is expected to post earnings of $2.28 per share on $29.56 billion in revenues. This represents a 16.33% change in EPS on a 13.52% change in revenues. For the next fiscal year, the company is expected to earn $2.41 per share on $30.29 billion in revenues. This represents a year-over-year change of 5.92% and 2.45%, respectively.
Valuation Metrics
Flex may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Flex has a Value Score of A. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 8.8X current fiscal year EPS estimates, which is not in-line with the peer industry average of 17.3X. On a trailing cash flow basis, the stock currently trades at 6.6X versus its peer group's average of 10.1X. Additionally, the stock has a PEG ratio of 0.69. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Flex currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Flex meets the list of requirements. Thus, it seems as though Flex shares could have potential in the weeks and months to come.
How Does FLEX Stack Up to the Competition?
Shares of FLEX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Bel Fuse Inc. (BELFB - Free Report) . BELFB has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of C.
Earnings were strong last quarter. Bel Fuse Inc. beat our consensus estimate by 94.74%, and for the current fiscal year, BELFB is expected to post earnings of $4.12 per share on revenue of $643.21 million.
Shares of Bel Fuse Inc. have gained 22.1% over the past month, and currently trade at a forward P/E of 8.97X and a P/CF of 12.08X.
The Electronics - Miscellaneous Products industry is in the top 37% of all the industries we have in our universe, so it looks like there are some nice tailwinds for FLEX and BELFB, even beyond their own solid fundamental situation.
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Flex Ltd. (FLEX) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Flex (FLEX - Free Report) ? Shares have been on the move with the stock up 9.7% over the past month. The stock hit a new 52-week high of $20.5 in the previous session. Flex has gained 9.6% since the start of the year compared to the -32.4% move for the Zacks Computer and Technology sector and the -37.3% return for the Zacks Electronics - Miscellaneous Products industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 26, 2022, Flex reported EPS of $0.63 versus consensus estimate of $0.51 while it beat the consensus revenue estimate by 7.87%.
For the current fiscal year, Flex is expected to post earnings of $2.28 per share on $29.56 billion in revenues. This represents a 16.33% change in EPS on a 13.52% change in revenues. For the next fiscal year, the company is expected to earn $2.41 per share on $30.29 billion in revenues. This represents a year-over-year change of 5.92% and 2.45%, respectively.
Valuation Metrics
Flex may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Flex has a Value Score of A. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 8.8X current fiscal year EPS estimates, which is not in-line with the peer industry average of 17.3X. On a trailing cash flow basis, the stock currently trades at 6.6X versus its peer group's average of 10.1X. Additionally, the stock has a PEG ratio of 0.69. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Flex currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Flex meets the list of requirements. Thus, it seems as though Flex shares could have potential in the weeks and months to come.
How Does FLEX Stack Up to the Competition?
Shares of FLEX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Bel Fuse Inc. (BELFB - Free Report) . BELFB has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of C.
Earnings were strong last quarter. Bel Fuse Inc. beat our consensus estimate by 94.74%, and for the current fiscal year, BELFB is expected to post earnings of $4.12 per share on revenue of $643.21 million.
Shares of Bel Fuse Inc. have gained 22.1% over the past month, and currently trade at a forward P/E of 8.97X and a P/CF of 12.08X.
The Electronics - Miscellaneous Products industry is in the top 37% of all the industries we have in our universe, so it looks like there are some nice tailwinds for FLEX and BELFB, even beyond their own solid fundamental situation.