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Plexus (PLXS) Up 1.7% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Plexus (PLXS - Free Report) . Shares have added about 1.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is 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 its most recent earnings report in order to get a better handle on the important catalysts.

Plexus Q1 Earnings Beat Estimates, Revenues Down Y/Y

Plexus reported first-quarter fiscal 2021 adjusted earnings of $1.23 per share that beat the Zacks Consensus Estimate by 10.8%. Moreover, the figure grew 23% year over year.

Revenues of $830.4 million beat the consensus mark by 0.02%. However, the figure decreased 2.6% year over year due to lower Americas and Europe, and the Middle East and Africa (EMEA) revenues, which fully offset steady performance in the Asia-Pacific (APAC).

APAC revenues were flat year over year at $451 million. However, EMEA revenues were $79 million, down 7.1%. Moreover, revenues in the Americas declined 7.4% to $327 million.

Plexus won 35 manufacturing contracts during the quarter, worth $223 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $1 billion in annualized revenues.

Market Sector Details

Industrial revenues grew 2.7% year over year to $378 million and accounted for 45.5% of total revenues. Beginning first-quarter fiscal 2021, Plexus consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector.

Healthcare/Life Sciences revenues climbed 2.2% from the year-ago quarter to $319 million. The sector accounted for 38.4% of total revenues.

However, Aerospace/Defense revenues decreased 22.7% year over year to $133 million and accounted for 16% of total revenues.

Notably, the top 10 customers of the company accounted for 55% of net revenues.

Operating Details

Gross profit on a GAAP basis increased 0.1% year over year to $79.3 million. Gross margin expanded 30 basis points (bps) year over year to 9.5%.

Selling and administrative expenses (3.9% of revenues) decreased 17.4% from the year-ago quarter to $32.4 million.

Plexus reported adjusted operating income of $46.9 million, up 17.4% year over year. Adjusted operating margin expanded 100 bps on a year-over-year basis to 5.6%

Balance Sheet & Cash Flow

As of Jan 2, 2021, Plexus had cash & cash equivalents worth $356.9 million compared with $385.8 million as of Oct 3, 2020.

Moreover, as of Jan 2, 2021, the company had long-term debt of $188.1 million compared with $188 million as of Oct 3, 2020.

In first-quarter fiscal 2021, cash flow provided by operations was $6.7 million. The company reported free cash outflow of $9.2 million.

ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 16.3% for first-quarter fiscal 2021, which was much higher than Plexus’ weighted average cost of capital of 8.1%.

Guidance

For second-quarter fiscal 2021, revenues are projected between $860 million and $900 million. GAAP operating margin is expected between 5% and 5.5%.

GAAP earnings are expected between $1.17 and $1.32 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 22.48% due to these changes.

VGM Scores

At this time, Plexus 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 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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