A month has gone by since the last earnings report for Plexus (PLXS Quick QuotePLXS - Free Report) . Shares have added about 12.4% 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 the most recent earnings report in order to get a better handle on the important drivers.

Plexus Q2 Earnings & Revenues Beat Estimates

Plexus reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of 94 cents, which decreased 35.1% year over year. The Zacks Consensus Estimate was pegged at 87 cents per share.

Revenues of $967 million decreased 9.7% year over year. The top-line performance was affected mainly due to weakness in the Healthcare/Life Sciences and Industrial sectors. Revenues surpassed the Zacks Consensus Estimate by 1.6%.

In the reported quarter, revenues from Asia-Pacific and America declined 11.2% and 21.1%, respectively. Revenues from Europe, the Middle East and Africa rose 51.9%.

In the fiscal second quarter, Plexus won 32 manufacturing contracts worth $255 million in annualized revenues when fully ramped into production. Plexus also noted that a funnel of qualified manufacturing opportunities now amounted to $3.5 billion, which decreased by $459 million in the fiscal first quarter.

Market Sector Details

Industrial revenues were down 4.8% year over year to $418 million, contributing 43% to total revenues.

Healthcare/Life Sciences’ revenues declined 22.3% from the year-ago quarter’s levels to $379 million, contributing 39% to total revenues.

Revenues from Aerospace/Defense increased 18.1% year over year to $170 million, contributing 17% to total revenues.

The company’s top 10 customers accounted for 48% of net revenues in the fiscal second quarter.

Operating Details

Gross profit on a GAAP basis decreased 14.5% year over year to $88.1 million. Gross margin contracted 50 basis points (bps) to 9.1%.

Selling and administrative expenses increased 3.3% from the year-ago quarter to $47.6 million.

PLXS reported an adjusted operating income of $40.5 million, down 28.9% year over year. Adjusted operating margin contracted 110 bps to 4.2%.

Balance Sheet & Cash Flow

As of Mar 30, 2024, Plexus had cash & cash equivalents worth $265.1 million compared with $231.9 million as of Dec 30, 2023.

As of Mar 30, 2024, PLXS had long-term debt and finance lease obligations, net of the current portion of $192 million compared with $192.1 million as of Dec 30, 2023.

In the quarter under review, the cash flow from operations was $87.8 million. Plexus reported a free cash outflow of $64.9 million.

PLXS repurchased shares worth $17.6 million in the fiscal second quarter. It has shares worth $38.1 million left under its existing $50 million share repurchase authorization.

Guidance

For third-quarter fiscal 2024, revenues are projected to be between $960 million and $1 billion.

GAAP operating margin is expected to be between 3.9% and 4.3%. GAAP diluted EPS is expected to be in the range of 80-95 cents.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted -17.02% due to these changes.

VGM Scores

At this time, Plexus has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 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. Notably, Plexus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.