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Flex Fuels Growth via SpinCo Separation & Electrical Power Acquisition
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Key Takeaways
Flex plans to separate its Power and Cloud portfolio into the publicly traded SpinCo.
FLEX acquired Electrical Power to add power control and protection systems for utilities and data centers.
Flex says Electrical Power broadens infrastructure solutions and supports grid resiliency programs.
Flex Ltd. (FLEX - Free Report) has continued to reshape its business through portfolio actions, strategic acquisitions and investments aimed at strengthening its position in high-growth markets. The company recently announced plans to separate its Power and Cloud portfolio into a new publicly traded company, SpinCo, which will focus on digital and electrical infrastructure solutions supporting AI data centers and mission-critical applications. Following the separation, Flex will continue operating as an advanced manufacturing company serving diversified end markets while emphasizing portfolio optimization, cash flow generation and shareholder returns.
A key step in this strategy was the acquisition of Electrical Power Products, Inc. (“EP²”), completed on May 4, 2026. EP² provides engineered-to-order electrical power control and protection systems, and the acquisition expands Flex’s Critical Power portfolio by adding customized power control and protection capabilities for utility, power generation and data center customers. The transaction strengthens Flex’s presence in grid modernization and electrification while increasing exposure to growing demand driven by AI-related data center expansion. Prior to closing, Flex announced the all-cash acquisition valued at approximately $1.1 billion, with anticipated tax benefits of around $0.1 billion, resulting in a net value of roughly $1.0 billion. The company expects the transaction to be accretive to adjusted earnings per share in the first full fiscal year following completion.
During its fourth-quarter fiscal 2026 earnings call, management stated that EP² enhances Flex’s power portfolio with utility-grade, specification-driven solutions that support grid modernization and electrification. Combined with Flex’s existing capabilities in power distribution, switchgear, thermal management and integrated rack-scale solutions, the acquisition broadens the company’s ability to deliver end-to-end solutions for utility and infrastructure customers while increasing exposure to long-cycle, margin-accretive programs that support grid resiliency.
Management also noted that the acquisition expands the product portfolio and geographic reach of its Cloud and Power Infrastructure business while supporting growth opportunities tied to power, thermal and compute integration. Additionally, Flex expanded its collaboration with Teradyne Robotics to advance intelligent automation across global manufacturing operations.
Prior acquisitions, such as JetCool Technologies and Crown Technical Systems, enhanced direct-to-chip liquid cooling and critical power solutions for data centers, while earlier deals expanded the manufacturing footprint in several end markets. Over time, these transactions have supported Flex’s push toward higher-value, technology-led programs.
Taking a Look at FLEX’s Competitors
Jabil Inc. (JBL - Free Report) is benefiting from strength in AI data center infrastructure, capital equipment and warehouse automation markets. Its focus on end-market and product diversification is a key catalyst. JBL’s global factory network, AI and ML integration, and disciplined working capital management drive growth, productivity and scalability. In April 2026, Jabil announced that it is collaborating with Sivers Semiconductors to develop an energy-efficient 1.6T pluggable optical transceiver module.
Management expects AI data center infrastructure, healthcare and advanced warehouse and retail automation to be the major growth drivers in 2026. For fiscal 2026, revenues are now projected at $34 billion, up from the prior estimate of $32.4 billion.
Sanmina Corporation (SANM - Free Report) is benefiting from rising demand for cloud and AI infrastructure programs, supported by its vertically integrated manufacturing model and broad global footprint. SANM continues to deepen customer relationships through end-to-end design, production and supply chain capabilities, while the ZT Systems acquisition expands its exposure to higher-growth accelerated compute markets. Management highlighted that core revenues rose 7.3% year over year in second-quarter fiscal 2026, supported by broad-based demand across most end markets, helping the company reach the $4 billion quarterly revenue level for the first time since the ZT Systems acquisition was integrated into results. For fiscal 2026, Sanmina expects revenues of $13.7-$14.3 billion. Management also reiterated that ZT Systems is expected to land well within the $5 billion to $6 billion annualized revenue framework previously discussed, positioning the company for a larger revenue base heading into fiscal 2027.
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Flex Fuels Growth via SpinCo Separation & Electrical Power Acquisition
Key Takeaways
Flex Ltd. (FLEX - Free Report) has continued to reshape its business through portfolio actions, strategic acquisitions and investments aimed at strengthening its position in high-growth markets. The company recently announced plans to separate its Power and Cloud portfolio into a new publicly traded company, SpinCo, which will focus on digital and electrical infrastructure solutions supporting AI data centers and mission-critical applications. Following the separation, Flex will continue operating as an advanced manufacturing company serving diversified end markets while emphasizing portfolio optimization, cash flow generation and shareholder returns.
A key step in this strategy was the acquisition of Electrical Power Products, Inc. (“EP²”), completed on May 4, 2026. EP² provides engineered-to-order electrical power control and protection systems, and the acquisition expands Flex’s Critical Power portfolio by adding customized power control and protection capabilities for utility, power generation and data center customers. The transaction strengthens Flex’s presence in grid modernization and electrification while increasing exposure to growing demand driven by AI-related data center expansion. Prior to closing, Flex announced the all-cash acquisition valued at approximately $1.1 billion, with anticipated tax benefits of around $0.1 billion, resulting in a net value of roughly $1.0 billion. The company expects the transaction to be accretive to adjusted earnings per share in the first full fiscal year following completion.
During its fourth-quarter fiscal 2026 earnings call, management stated that EP² enhances Flex’s power portfolio with utility-grade, specification-driven solutions that support grid modernization and electrification. Combined with Flex’s existing capabilities in power distribution, switchgear, thermal management and integrated rack-scale solutions, the acquisition broadens the company’s ability to deliver end-to-end solutions for utility and infrastructure customers while increasing exposure to long-cycle, margin-accretive programs that support grid resiliency.
Management also noted that the acquisition expands the product portfolio and geographic reach of its Cloud and Power Infrastructure business while supporting growth opportunities tied to power, thermal and compute integration. Additionally, Flex expanded its collaboration with Teradyne Robotics to advance intelligent automation across global manufacturing operations.
Prior acquisitions, such as JetCool Technologies and Crown Technical Systems, enhanced direct-to-chip liquid cooling and critical power solutions for data centers, while earlier deals expanded the manufacturing footprint in several end markets. Over time, these transactions have supported Flex’s push toward higher-value, technology-led programs.
Taking a Look at FLEX’s Competitors
Jabil Inc. (JBL - Free Report) is benefiting from strength in AI data center infrastructure, capital equipment and warehouse automation markets. Its focus on end-market and product diversification is a key catalyst. JBL’s global factory network, AI and ML integration, and disciplined working capital management drive growth, productivity and scalability. In April 2026, Jabil announced that it is collaborating with Sivers Semiconductors to develop an energy-efficient 1.6T pluggable optical transceiver module.
Management expects AI data center infrastructure, healthcare and advanced warehouse and retail automation to be the major growth drivers in 2026. For fiscal 2026, revenues are now projected at $34 billion, up from the prior estimate of $32.4 billion.
Sanmina Corporation (SANM - Free Report) is benefiting from rising demand for cloud and AI infrastructure programs, supported by its vertically integrated manufacturing model and broad global footprint. SANM continues to deepen customer relationships through end-to-end design, production and supply chain capabilities, while the ZT Systems acquisition expands its exposure to higher-growth accelerated compute markets. Management highlighted that core revenues rose 7.3% year over year in second-quarter fiscal 2026, supported by broad-based demand across most end markets, helping the company reach the $4 billion quarterly revenue level for the first time since the ZT Systems acquisition was integrated into results. For fiscal 2026, Sanmina expects revenues of $13.7-$14.3 billion. Management also reiterated that ZT Systems is expected to land well within the $5 billion to $6 billion annualized revenue framework previously discussed, positioning the company for a larger revenue base heading into fiscal 2027.
Flex’s Price Performance, Valuation & Estimates
Shares of FLEX have surged 68.9% in the past month compared with the Electronics - Miscellaneous Products industry’s growth of 19.5%.
Image Source: Zacks Investment Research
FLEX trades at a forward 12-month price-to-earnings (P/E) ratio of 36.22, above the industry’s 32.54.
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 flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.