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FLEX Stock Surges 42.4% YTD: Will the Upward Trend Continue?
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Flex (FLEX - Free Report) witnessed strong momentum this year so far. Shares of the company have rallied 42.4% in the same time frame compared with the sub-industry’s 25.2% growth.
The company provides advanced manufacturing solutions and supply-chain services throughout the product lifecycle development, including fulfillment, after-market support and circular economy solutions.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve into the factors working in favor of this Zacks Rank #3 (Hold) stock.
The company is benefiting from momentum across its automotive business due to program wins and steady vehicle content expansion. Going ahead, the company expects the segment to benefit from secular trends in electrification and increasing demand for electric vehicles (EV) and advanced driver-assistance systems.
The company’s industrial segment is likely to benefit from solid demand for EV charging, automation and cloud/critical power. The healthcare segment is expected to benefit from several program ramps and long-term secular trends.
Over the long term, the company expects Communications & Enterprise Compute to benefit from secular growth trends in cloud and networking technology, mainly due to strong AI-driven cloud spending.
The company’s capital allocation strategy to enhance long-term shareholders’ value is noteworthy. In the last reported quarter, FLEX repurchased shares worth $309 million.
For fiscal 2024, Flex now expects total revenues between $28.1 billion and $28.8 billion compared with the earlier guidance of $30.5-$31.5 billion. It anticipates adjusted EPS in the range of $2.49-$2.66 compared with the previous prediction of $2.35-$2.55.
However, the 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 Estimates
FLEX’s fiscal 2024 and 2025 EPS are suggested to increase 8.5% and 19% on a year-over-year basis to $2.56 and $3.05, respectively.
Over the last 60 days, estimates for fiscal 2024 and 2025 earnings have improved 3.6% and 10.1%, respectively.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS has inched up 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have gained 49% in the past year.
The Zacks Consensus Estimate for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR lost 17% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 3.9% in the past 60 days to $8.08.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have soared 42.5% in the past year.
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FLEX Stock Surges 42.4% YTD: Will the Upward Trend Continue?
Flex (FLEX - Free Report) witnessed strong momentum this year so far. Shares of the company have rallied 42.4% in the same time frame compared with the sub-industry’s 25.2% growth.
The company provides advanced manufacturing solutions and supply-chain services throughout the product lifecycle development, including fulfillment, after-market support and circular economy solutions.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve into the factors working in favor of this Zacks Rank #3 (Hold) stock.
The company is benefiting from momentum across its automotive business due to program wins and steady vehicle content expansion. Going ahead, the company expects the segment to benefit from secular trends in electrification and increasing demand for electric vehicles (EV) and advanced driver-assistance systems.
The company’s industrial segment is likely to benefit from solid demand for EV charging, automation and cloud/critical power. The healthcare segment is expected to benefit from several program ramps and long-term secular trends.
Over the long term, the company expects Communications & Enterprise Compute to benefit from secular growth trends in cloud and networking technology, mainly due to strong AI-driven cloud spending.
The company’s capital allocation strategy to enhance long-term shareholders’ value is noteworthy. In the last reported quarter, FLEX repurchased shares worth $309 million.
For fiscal 2024, Flex now expects total revenues between $28.1 billion and $28.8 billion compared with the earlier guidance of $30.5-$31.5 billion. It anticipates adjusted EPS in the range of $2.49-$2.66 compared with the previous prediction of $2.35-$2.55.
However, the 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 Estimates
FLEX’s fiscal 2024 and 2025 EPS are suggested to increase 8.5% and 19% on a year-over-year basis to $2.56 and $3.05, respectively.
Over the last 60 days, estimates for fiscal 2024 and 2025 earnings have improved 3.6% and 10.1%, respectively.
Stocks to Consider
Some better-ranked stocks worth considering in the broader technology space are Blackbaud (BLKB - Free Report) , NETGEAR (NTGR - Free Report) and Watts Water Technologies (WTS - Free Report) . Watts Water Technologies sports a Zacks Rank #1 (Strong Buy), while Blackbaud and NETGEAR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS has inched up 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have gained 49% in the past year.
The Zacks Consensus Estimate for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR lost 17% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 3.9% in the past 60 days to $8.08.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have soared 42.5% in the past year.