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Flex posts strong free cash flow and robust buybacks, reinforcing its financial position.
Flex accelerates data center growth with next-gen AI power, compute and cooling solutions.
Flex sees balanced fiscal 2026 growth across segments amid competition and uneven end markets.
With rising AI investments, strengthened customer ties and disciplined financial management, Flex Ltd. (FLEX - Free Report) enters the second half of fiscal 2026 with momentum and a strong focus on long-term value creation. Despite tariff tensions, forex headwinds and Ukraine disruptions, Flex continues to grow margins and generate strong cash flow while partnering with top tech companies to design and deliver power, cooling, and systems infrastructure for faster, more reliable, large-scale data center deployments.
The company is delivering strong free cash flow through disciplined capex and efficient working capital management. It posted a record $1.1 billion in free cash flow in fiscal 2025 and generated $305 million in adjusted free cash flow in second-quarter fiscal 2026. Management remains confident of achieving more than 80% free cash flow conversion. This strong cash generation supports share repurchases, debt reduction and continued investment, strengthening Flex’s financial position and long-term growth. For fiscal 2025, Flex repurchased stock worth $1.3 billion. In the second quarter of fiscal 2026, it repurchased $297 million worth of stock.
Apart from healthy cash, FLEX is gaining momentum in its data center portfolio by advancing next-generation AI power, compute and cooling solutions through strong customer and technology partnerships. The company continues to show solid growth in Medical Devices, Optical and Satcom, while early signs of stabilization in Automotive and Renewables support a positive long-term growth outlook. By leveraging proprietary products, deep systems expertise and global manufacturing scale, Flex delivers integrated power and IT solutions that enable hyperscale and silicon customers to deploy faster, operate more efficiently and improve margins. The company remains confident in its outlook and expects data center revenues to grow at least 35% this year.
For fiscal 2026, Flex expects balanced growth as it navigates ongoing macroeconomic swings. The Reliability segment is projected to deliver low- to mid-single-digit growth, supported by strong data center power demand and stable healthcare trends, despite softer industrial and automotive conditions. The Agility segment is expected to grow at a mid- to high-single-digit rate, driven by continued strength in cloud, AI and networking, while lifestyle markets benefit from new manufacturing partnerships, partially offset by softer consumer device demand. However, intense competition from other EMS peers like Jabil Inc. (JBL - Free Report) and Sanmina Corporation (SANM - Free Report) is likely to erode contract wins and dent revenue growth.
How FLEX’s Market Peers Stack Up?
Jabil’s diversifying business and expanding opportunities in the healthcare, cloud, data center, power and energy infrastructure businesses are its major growth drivers. Strong growth in free cash flow is another positive. The company’s free cash flow was $1.3 billion in fiscal 2025, and it remains committed to generating more than $1.3 billion in free cash flow in fiscal 2025. A higher free cash flow indicates efficient financial management practices, optimum utilization of assets and improved operational efficiency. However, Jabil is negatively impacted by weakness in several end markets. Rising competition in the electronic manufacturing service market and customer concentration risk are concerns.
Sanmina has a strong presence across multiple end markets, including medical, defense, communication, cloud infrastructure, automotive and more. Such a diverse market presence strengthens its business resilience by mitigating risks associated with economic downturns in any single industry. A strong liquidity position drives investment in growth initiatives and allows it to capitalize on emerging opportunities. Strong growth in gross profit is a positive. In the fourth quarter of fiscal 2025, Sanmina generated $199.1 million of net cash from operating activities compared with $51.9 million in the previous-year quarter. However, inflationary pressure due to geopolitical unrest and global macro woes is hurting it.
Image: Bigstock
Can Flex's Cash Flow & Market Strength Offset Ongoing Macro Pressures?
Key Takeaways
With rising AI investments, strengthened customer ties and disciplined financial management, Flex Ltd. (FLEX - Free Report) enters the second half of fiscal 2026 with momentum and a strong focus on long-term value creation. Despite tariff tensions, forex headwinds and Ukraine disruptions, Flex continues to grow margins and generate strong cash flow while partnering with top tech companies to design and deliver power, cooling, and systems infrastructure for faster, more reliable, large-scale data center deployments.
The company is delivering strong free cash flow through disciplined capex and efficient working capital management. It posted a record $1.1 billion in free cash flow in fiscal 2025 and generated $305 million in adjusted free cash flow in second-quarter fiscal 2026. Management remains confident of achieving more than 80% free cash flow conversion. This strong cash generation supports share repurchases, debt reduction and continued investment, strengthening Flex’s financial position and long-term growth. For fiscal 2025, Flex repurchased stock worth $1.3 billion. In the second quarter of fiscal 2026, it repurchased $297 million worth of stock.
Apart from healthy cash, FLEX is gaining momentum in its data center portfolio by advancing next-generation AI power, compute and cooling solutions through strong customer and technology partnerships. The company continues to show solid growth in Medical Devices, Optical and Satcom, while early signs of stabilization in Automotive and Renewables support a positive long-term growth outlook. By leveraging proprietary products, deep systems expertise and global manufacturing scale, Flex delivers integrated power and IT solutions that enable hyperscale and silicon customers to deploy faster, operate more efficiently and improve margins. The company remains confident in its outlook and expects data center revenues to grow at least 35% this year.
For fiscal 2026, Flex expects balanced growth as it navigates ongoing macroeconomic swings. The Reliability segment is projected to deliver low- to mid-single-digit growth, supported by strong data center power demand and stable healthcare trends, despite softer industrial and automotive conditions. The Agility segment is expected to grow at a mid- to high-single-digit rate, driven by continued strength in cloud, AI and networking, while lifestyle markets benefit from new manufacturing partnerships, partially offset by softer consumer device demand. However, intense competition from other EMS peers like Jabil Inc. (JBL - Free Report) and Sanmina Corporation (SANM - Free Report) is likely to erode contract wins and dent revenue growth.
How FLEX’s Market Peers Stack Up?
Jabil’s diversifying business and expanding opportunities in the healthcare, cloud, data center, power and energy infrastructure businesses are its major growth drivers. Strong growth in free cash flow is another positive. The company’s free cash flow was $1.3 billion in fiscal 2025, and it remains committed to generating more than $1.3 billion in free cash flow in fiscal 2025. A higher free cash flow indicates efficient financial management practices, optimum utilization of assets and improved operational efficiency. However, Jabil is negatively impacted by weakness in several end markets. Rising competition in the electronic manufacturing service market and customer concentration risk are concerns.
Sanmina has a strong presence across multiple end markets, including medical, defense, communication, cloud infrastructure, automotive and more. Such a diverse market presence strengthens its business resilience by mitigating risks associated with economic downturns in any single industry. A strong liquidity position drives investment in growth initiatives and allows it to capitalize on emerging opportunities. Strong growth in gross profit is a positive. In the fourth quarter of fiscal 2025, Sanmina generated $199.1 million of net cash from operating activities compared with $51.9 million in the previous-year quarter. However, inflationary pressure due to geopolitical unrest and global macro woes is hurting it.
Flex Price Performance, Valuation and Estimates
Shares of FLEX have gained 78% in the past year compared with the Electronics - Miscellaneous Products industry’s growth of 24.7%.
Image Source: Zacks Investment Research
FLEX trades at a forward 12-month price-to-earnings (P/E) ratio of 22.04, below the industry’s 24.76.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FLEX earnings for fiscal 2026 has been revised upward over the past 60 days.
Image Source: Zacks Investment Research
FLEX currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.