It has been about a month since the last earnings report for Plexus Corp. (PLXS - Free Report) . Shares have lost about 5.2% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is PLXS 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.
Plexus reported fiscal second-quarter 2018 adjusted earnings of 74 cents per share, which missed the Zacks Consensus Estimate by a penny and declined 11.9% year over year.
Revenues of $698.7 million however surpassed the consensus mark of $690.8 million and increased 15.6% on a year-over-year basis.
Healthcare/Life Sciences revenues (35%) were up nearly 21% from the year-ago quarter to $248 million.
Industrial/Commercial revenues (35%) were up 26% year over year to $242 million.
Defense/Security/Aerospace segment revenues (16%) grew 11% on a year-over-year basis to $110 million.
Revenues from the Communications sector (14% of total revenue) however fell 8.3% year over year to $99 million.
Region-wise, revenues from the Americas increased 11% from the year-ago quarter to $302 million. Revenues from the Asia Pacific region rose 12.9% to $350 million on a year-over-year basis. Revenues from Europe, the Middle East and Africa, which totaled $74 million, grew 68.2% year over year.
Plexus won 41 new manufacturing programs worth approximately $255 million (highest quarterly win) in the quarter. It added over $847 million in revenues in the trailing four quarters from new wins.
The 10 customers of the company together accounted for about 58% of net revenues in the quarter.
Plexus reported adjusted operating income of $30.8 million for the quarter, down 5.5% year over year.
Adjusted operating margin contracted 100 basis points on a year-over-year basis to 4.4%.
Balance Sheet & Cash Flow
Plexus exited the quarter with cash & cash equivalents worth $402.5 million compared with $506.7 million as of Dec 30, 2017. The company had long-term debt and capital lease obligations of about $27.2 million compared with $26.2 million as of Dec 30, 2017.
For the quarter, the company used $66.3 million of cash flow in operations and $12.4 million for capital expenditures, resulting in free cash outflow of $78.7 million. Share repurchases for the quarter amounted to $31.6 million.
For the third quarter of fiscal 2018, revenues are projected in the range of $700-$740 million. GAAP earnings are projected within 76 and 86 cents per share.
Operating margin is expected to be in the band of 4.6% to 5%.
The company expects to achieve 12% revenue growth in fiscal 2018 on the back of new programs wins and improving end markets.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter.
At this time, PLXS has a subpar Growth Score of D. Its Momentum is doing a lot better with a B. The stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, PLXS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.