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FLEX Stock Soars 24.3% YTD: Will the Momentum Continue?
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Flex (FLEX - Free Report) witnessed strong momentum this year, with shares having rallied 24.3% compared with 17.5% and 17.6% growth of the sub-industry and S&P Composite, respectively. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, FLEX has a VGM Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
The company offers advanced manufacturing solutions and supply-chain services throughout the product lifecycle development including fulfillment, after-market support and circular economy solutions.
Flex serves companies of all sizes in various industries and end-markets including medical, automotive, industrial, home appliances, capital equipment, energy, telecom, networking, enterprise compute, wearables, connected living and mobile.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
FLEX is benefiting from continued momentum in the Reliability Solutions segment. In the last reported quarter, segmental revenues improved 11% year over year to $3.3 billion. Demand remained healthy across the business segment partly offset by supply-chain constraints.
Its automotive sector benefits owing to increasing demand for electric vehicles and next-generation mobility. The healthcare segment is expected to gain from strong demand for elective procedures and a continued ramp-up in large medical device programs.
The industrial segment is likely to be aided by solid demand for renewables and critical power. Over the long term, management expects Communications & Enterprise Compute to benefit from secular growth trends in cloud and networking technology. The company also noted that Generative AI/ML applications are expected to drive revenue opportunities in the data center vertical going forward.
For fiscal 2024, Flex expects revenues to be between $30.5 billion and $31.5 billion. It anticipates adjusted EPS in the range of $2.35-$2.55. Adjusted operating margin is projected in the 5-5.2% band.
However, increasing slowdown in enterprise IT spending due to rising macroeconomic uncertainty is a headwind. The lifestyle segment is likely to suffer from weakness in consumer-related demand. A leveraged balance sheet is an added concern.
A Look at Estimate Revision Activity
FLEX’s earnings per share are expected to increase 3.4% and 13.7% on a year-over-year basis to $2.44 and $2.78 in fiscal 2024 and 2025, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 earnings has remained unchanged in the past seven days.For fiscal 2024 and 2025, the company’s revenues are projected to rise 2.1% and 4.8% to $30.98 billion and $32.5 billion, respectively.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has gained 6.3% in the past 60 days to $2.86 per share. BMI’s earnings beat estimates in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 66.8% in the past year.
The Zacks Consensus Estimate for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 0.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings surpassed estimates in the last four quarters, the average beat being 15.5%. Shares of CRM have grown 11% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has improved 6.6% in the past 60 days to $1.46 per share. PEGA’s earnings outshined estimates in the last four quarters, the average surprise being 166.2%. Shares of PEGA have jumped 12.8% in the past year.
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FLEX Stock Soars 24.3% YTD: Will the Momentum Continue?
Flex (FLEX - Free Report) witnessed strong momentum this year, with shares having rallied 24.3% compared with 17.5% and 17.6% growth of the sub-industry and S&P Composite, respectively. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, FLEX has a VGM Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
The company offers advanced manufacturing solutions and supply-chain services throughout the product lifecycle development including fulfillment, after-market support and circular economy solutions.
Flex serves companies of all sizes in various industries and end-markets including medical, automotive, industrial, home appliances, capital equipment, energy, telecom, networking, enterprise compute, wearables, connected living and mobile.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
FLEX is benefiting from continued momentum in the Reliability Solutions segment. In the last reported quarter, segmental revenues improved 11% year over year to $3.3 billion. Demand remained healthy across the business segment partly offset by supply-chain constraints.
Its automotive sector benefits owing to increasing demand for electric vehicles and next-generation mobility. The healthcare segment is expected to gain from strong demand for elective procedures and a continued ramp-up in large medical device programs.
The industrial segment is likely to be aided by solid demand for renewables and critical power. Over the long term, management expects Communications & Enterprise Compute to benefit from secular growth trends in cloud and networking technology. The company also noted that Generative AI/ML applications are expected to drive revenue opportunities in the data center vertical going forward.
For fiscal 2024, Flex expects revenues to be between $30.5 billion and $31.5 billion. It anticipates adjusted EPS in the range of $2.35-$2.55. Adjusted operating margin is projected in the 5-5.2% band.
However, increasing slowdown in enterprise IT spending due to rising macroeconomic uncertainty is a headwind. The lifestyle segment is likely to suffer from weakness in consumer-related demand. A leveraged balance sheet is an added concern.
A Look at Estimate Revision Activity
FLEX’s earnings per share are expected to increase 3.4% and 13.7% on a year-over-year basis to $2.44 and $2.78 in fiscal 2024 and 2025, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 earnings has remained unchanged in the past seven days.For fiscal 2024 and 2025, the company’s revenues are projected to rise 2.1% and 4.8% to $30.98 billion and $32.5 billion, respectively.
Other Stocks to Consider
Some other stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Salesforce (CRM - Free Report) and Pegasystems (PEGA - Free Report) . While Badger Meter sports a Zacks Rank #1, Salesforce and Pegasystems carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has gained 6.3% in the past 60 days to $2.86 per share. BMI’s earnings beat estimates in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 66.8% in the past year.
The Zacks Consensus Estimate for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 0.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings surpassed estimates in the last four quarters, the average beat being 15.5%. Shares of CRM have grown 11% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has improved 6.6% in the past 60 days to $1.46 per share. PEGA’s earnings outshined estimates in the last four quarters, the average surprise being 166.2%. Shares of PEGA have jumped 12.8% in the past year.