A month has gone by since the last earnings report for Plexus (PLXS). Shares have lost about 7.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Plexus due for a breakout? 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 catalysts.
Plexus Q1 Earnings Beat Estimates, Revenues Up Y/Y
Plexus reported first-quarter fiscal 2020 adjusted earnings of $1 per share that beat the Zacks Consensus Estimate by 7.5% and increased 9.9% year over year.
Revenues of $852 million beat the consensus mark of $801 million and increased 11.2% year over year. Strong revenues from Aerospace/Defense, Industrial/Commercial and Healthcare/Life Sciences sectors drove the top line.
Asia-Pacific (APAC) revenues increased 19.3% year over year to $451 million. Europe, the Middle East and Africa (EMEA) revenues totaled $85 million, up 16.4% year over year. However, Americas (AMER) revenues declined 0.3% to $353 million.
Plexus won 30 manufacturing contracts during the quarter, worth $167 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $843 million in annualized revenues.
Market Sector Details
Healthcare/Life Sciences revenues rose 3.7% from the year-ago quarter to $312 million. The sector accounted for 36.6% of total revenues.
Industrial/Commercial revenues grew 41.6% year over year to $310 million and accounted for 36.4% of total revenues, driven by portfolio diversification, program ramps and increased strength in the semiconductor capital equipment space.
Aerospace/Defense revenues jumped 39.8% year over year to $172 million and accounted for 20.2% of total revenues, driven by the company’s focus on zero defects and perfect delivery.
Communications accounted for 6.8% of total revenues. Revenues from the sector decreased 52.8% year over year to $58 million.
Notably, the top 10 customers of the company accounted for 54% of net revenues.
Operating Details
Gross profit increased 9.4% year over year to $79.2 million. However, gross margin contracted 20 basis points (bps) year over year to 9.3%.
Selling and administrative expenses (4.6% of revenues) increased 10.8% from the year-ago quarter to approximately $39.3 million.
Plexus reported adjusted operating income of $39.9 million, up 8.1% year over year. However, adjusted operating margin contracted 10 bps year-over-year basis to 4.7%.
Balance Sheet & Cash Flow
As of Jan 4, 2020, Plexus had cash & cash equivalents worth $252.9 million compared with $223.8 million as of Sep 28, 2019.
Moreover, as of Jan 4, 2020, the company had a long-term debt of $186.8 million compared with $187.3 million as of Sep 28, 2019.
In first-quarter fiscal 2020, Plexus generated free cash flow of $61 million.
Further, the company repurchased shares worth $6.3 million at an average price of $69.82 per share.
ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 14.7% for first-quarter fiscal 2020. Plexus’ weighted average cost of capital for fiscal 2020 was 8.8%.
Guidance
For second-quarter fiscal 2020, revenues are projected between $790 million and $830 million, driven by continued strength in the company’s Industrial/Commercial and Aerospace/Defense business.
Additionally, Plexus expects GAAP earnings between 80 cents and 90 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -11% due to these changes.
VGM Scores
Currently, Plexus has a nice Growth Score of B, a grade with the same score on the momentum front. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Plexus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Plexus (PLXS) Down 7.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Plexus (PLXS). Shares have lost about 7.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Plexus due for a breakout? 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 catalysts.
Plexus Q1 Earnings Beat Estimates, Revenues Up Y/Y
Plexus reported first-quarter fiscal 2020 adjusted earnings of $1 per share that beat the Zacks Consensus Estimate by 7.5% and increased 9.9% year over year.
Revenues of $852 million beat the consensus mark of $801 million and increased 11.2% year over year. Strong revenues from Aerospace/Defense, Industrial/Commercial and Healthcare/Life Sciences sectors drove the top line.
Asia-Pacific (APAC) revenues increased 19.3% year over year to $451 million. Europe, the Middle East and Africa (EMEA) revenues totaled $85 million, up 16.4% year over year. However, Americas (AMER) revenues declined 0.3% to $353 million.
Plexus won 30 manufacturing contracts during the quarter, worth $167 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $843 million in annualized revenues.
Market Sector Details
Healthcare/Life Sciences revenues rose 3.7% from the year-ago quarter to $312 million. The sector accounted for 36.6% of total revenues.
Industrial/Commercial revenues grew 41.6% year over year to $310 million and accounted for 36.4% of total revenues, driven by portfolio diversification, program ramps and increased strength in the semiconductor capital equipment space.
Aerospace/Defense revenues jumped 39.8% year over year to $172 million and accounted for 20.2% of total revenues, driven by the company’s focus on zero defects and perfect delivery.
Communications accounted for 6.8% of total revenues. Revenues from the sector decreased 52.8% year over year to $58 million.
Notably, the top 10 customers of the company accounted for 54% of net revenues.
Operating Details
Gross profit increased 9.4% year over year to $79.2 million. However, gross margin contracted 20 basis points (bps) year over year to 9.3%.
Selling and administrative expenses (4.6% of revenues) increased 10.8% from the year-ago quarter to approximately $39.3 million.
Plexus reported adjusted operating income of $39.9 million, up 8.1% year over year. However, adjusted operating margin contracted 10 bps year-over-year basis to 4.7%.
Balance Sheet & Cash Flow
As of Jan 4, 2020, Plexus had cash & cash equivalents worth $252.9 million compared with $223.8 million as of Sep 28, 2019.
Moreover, as of Jan 4, 2020, the company had a long-term debt of $186.8 million compared with $187.3 million as of Sep 28, 2019.
In first-quarter fiscal 2020, Plexus generated free cash flow of $61 million.
Further, the company repurchased shares worth $6.3 million at an average price of $69.82 per share.
ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 14.7% for first-quarter fiscal 2020. Plexus’ weighted average cost of capital for fiscal 2020 was 8.8%.
Guidance
For second-quarter fiscal 2020, revenues are projected between $790 million and $830 million, driven by continued strength in the company’s Industrial/Commercial and Aerospace/Defense business.
Additionally, Plexus expects GAAP earnings between 80 cents and 90 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -11% due to these changes.
VGM Scores
Currently, Plexus has a nice Growth Score of B, a grade with the same score on the momentum front. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Plexus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.