A month has gone by since the last earnings report for Flex (FLEX Quick QuoteFLEX - Free Report) . Shares have lost about 3.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Flex 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.

FLEX Q1 Earnings Surpass Estimates

Flex reported first-quarter fiscal 2024 adjusted earnings per share (EPS) of 57 cents, beating the Zacks Consensus Estimate by 11.8%. The bottom line grew 5.6% year over year.

Revenues decreased 0.2% year over year to $7.3 billion. However, it surpassed the consensus mark by 1.3%. The downtick was caused by weakness across the Agility Solutions segment.

Segment Details

The Flex Reliability Solutions Group comprises Health Solutions, Automotive and Industrial businesses. Revenues improved 11% year over year to $3.3 billion. Demand remained healthy across the business segment, partly offset by supply-chain constraints.

The Flex Agility Solutions Group comprises Communications & Enterprise Compute and Lifestyle and Consumer Devices businesses. Revenues were down 10% year over year to $3.6 billion. The downtick was caused due to the softness in consumer end markets and enterprise IT.

The Nextracker Group’s revenues rose 21% year over year to $0.5 billion.

Operating Details

Non-GAAP gross margin increased 100 basis points (bps) on a year-over-year basis to 8.4% in the reported quarter.

Non-GAAP selling, general & administrative expenses, as a percentage of revenues, were 3.2%, which increased 20 bps from the prior-year period.
Non-GAAP operating margin expanded 60 bps year over year to 5.1%.

Adjusted operating margins of the Flex Reliability Solutions Group remained at 5% year over year. The Nextracker Group’s adjusted operating margin was 17.2%, up 960 bps year over year. The Flex Agility Solutions Group’s adjusted operating margin was 4.1%, down 20 bps.

Balance Sheet & Cash Flow

As of Jun 30, 2023, cash & cash equivalents totaled $2.66 billion compared with $3.29 billion as of Mar 31, 2023.

As of Jun 30, total debt (net of current portion) was $3.44 billion compared with $3.69 billion as of Mar 31, 2023.

In first-quarter fiscal 2024, the company generated cash flow from operating activities of $6 million and an adjusted free cash outflow of $150 million.
In the quarter under review, FLEX repurchased shares worth $197 million.

Guidance

For second-quarter fiscal 2024, Flex expects revenues between $7.3 billion and $7.7 billion.

Management expects adjusted EPS in the range of 55-60 cents. Adjusted operating income is projected to be between $370 million and $400 million.

For fiscal 2024, Flex expects revenues 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 to be in the range of 5-5.2%.

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 251.53% due to these changes.

VGM Scores

Currently, Flex has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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 this revision looks promising. It comes with little surprise Flex has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.