A month has gone by since the last earnings report for Plexus (
PLXS Quick Quote PLXS - Free Report) . Shares have added about 3.7% 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 Top Estimates, Revenues Surge Y/Y
Plexus reported first-quarter fiscal 2023 adjusted earnings of $1.49 per share, which surged 69.3% year over year. The Zacks Consensus Estimate was pegged at $1.47 per share.
Revenues of $1.094 billion increased 33.8% year over year. The top-line performance gained from continued momentum in secular growth markets amid weakness in semiconductor capital equipment market along with changes in new program ramp schedule and persistent supply-chain troubles. Revenues missed the Zacks Consensus Estimate by 1.1%
In the reported quarter, Asia-Pacific revenues rose 30.8%, while that from Europe and the Middle East and Africa, and the Americas increased 21.9% and 40.8%, respectively.
During the quarter, Plexus won 29 manufacturing contracts worth $158 million in annualized revenues when fully ramped into production. Trailing four-quarter manufacturing wins totaled more than $885 million in annualized revenues
Market Sector Details
Industrial’s revenues were up 29.7% year over year to $472 million, contributing 43% to total revenues.
Healthcare/Life Sciences segment’s revenues jumped 41.9% from the year-ago quarter’s levels to $488 million, contributing 45% to total revenues.
Revenues from Aerospace/Defense increased 22.9% year over year to $134 million, contributing 12% to total revenues.
The top 10 customers of the company accounted for 53% of net revenues for fiscal first quarter.
Gross profit on a GAAP basis increased 44.6% year over year to $101.2 million. The gross margin expanded 60 basis points (bps) to 9.3%.
Selling and administrative expenses (4% of revenues) increased 16.9% from the year-ago quarter to $43.9 million.
PLXS reported an adjusted operating income of $57.3 million, up 76.5% year over year. Adjusted operating margin expanded 120 bps to 5.2%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, Plexus had cash & cash equivalents worth $247.9 million compared with $274.8 million as of Oct 1, 2022.
As of Dec 31, 2022, the company had long-term debt and finance lease obligations, net of the current portion of $187.3 million compared with $187.8 million as of Oct 1, 2022.
In the quarter under review, the cash flow used in operations was $48.8 million. The company reported a free cash outflow of $71.9 million.
The company repurchased shares worth $11.5 million at an average price of $99.12 per share in the fiscal first quarter. The company has shares worth $35 million left under its existing share repurchase authorization.
For second-quarter fiscal 2023, revenues are projected between $1.02 billion and $1.07 billion.
GAAP operating margin is expected to be between 4.5% and 5%. GAAP earnings are expected in the range of $1.06-$1.24 per share, including 21 cents of stock-based compensation expenses.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -17.03% due to these changes.
At this time, Plexus has a poor Growth Score of F, a grade with the same score on the momentum front. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Plexus has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.