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FLEX Q2 Earnings and Revenues Top Estimates, Increase Y/Y
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Flex Ltd. (FLEX - Free Report) reported second-quarter fiscal 2023 adjusted earnings of 63 cents per share, beating the Zacks Consensus Estimate by 23.5%. The bottom line also grew 31.2% year over year.
Revenues increased 25% year over year to $7.8 billion, surpassing the consensus mark by 7.9%. The company benefited from strength across the Agility Solutions and Reliability Solutions segments backed by a strong customer backlog.
The Flex Agility Solutions Group comprises the Communications & Enterprise Compute or CEC, Lifestyle and Consumer Devices businesses. The group’s revenues were up 16% year over year to $4 billion.
Agility continued to grow at a profitable rate. The increases in CEC and Lifestyle were partially offset by macroeconomic constraints.
The Flex Reliability Solutions Group comprises Health Solutions, Automotive and Industrial businesses. The group’s revenues went up 34% year over year to $3.3 billion. Demand remained healthy across the business segment, partly offset by the semiconductor shortage.
The Nextracker group’s revenue went up 40% year over year to $0.5 billion, owing to strong industry demand amid panel availability shortage.
Following the announcement, shares of the company are up 4.2% in the pre-market trading on Oct 27, 2022. In the past year, shares of the company have increased 7.8% against the industry’s decline of 46.1%.
Image Source: Zacks Investment Research
Operating Details
The non-GAAP gross margin remained unchanged on a year-over-year basis at 7.7% in the reported quarter.
The non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of revenues, were 2.9% which decreased 0.2% from the prior-year period.
The non-GAAP operating margin expanded 20 bps year over year to 4.8% on a year-over-year basis.
The Flex Agility Solutions Group’s adjusted operating margin was 4.3%, down 19 bps year over year. The Flex Reliability Solutions Group’s adjusted operating margin was 5.3%, up 17 bps. The Nextracker Group’s adjusted operating margin was 9.1%, up 187 bps.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash & cash equivalents stood at $2.45 billion compared with $2.65 billion as of Jul 1, 2022.
As of Sep 30, 2022, total debt (net of current portion) stood at $3.08 billion compared with $3.13 billion as of Jul 1, 2022.
In second-quarter fiscal 2023, the company generated cash flow from operating activities of $103 million and a negative adjusted free cash flow of $84 million.
In the quarter under review, the company repurchased shares worth $72 million.
Guidance
For third-quarter fiscal 2023, Flex expects revenues between $7.3 billion and $7.7 billion.
The company expects adjusted earnings of 57-63 cents per share. The adjusted operating income is projected to be between $345 million and $375 million.
For fiscal 2023, Flex expects revenues between $29.1 billion and $30.1 billion. It expects adjusted earnings of $2.20-$2.35 per share. The adjusted operating margin is projected to be 4.6-4.8%.
The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.45 per share, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 81.9%. Shares of IDCC have decreased 25.1% in the past year.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, rising 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 10.8% in the past year.
The Zacks Consensus Estimate for Blackbaud’s fiscal 2023 earnings is pegged at $2.55 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 3%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 8.6%. Shares of BLKB have decreased 24.6% in the past year.
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FLEX Q2 Earnings and Revenues Top Estimates, Increase Y/Y
Flex Ltd. (FLEX - Free Report) reported second-quarter fiscal 2023 adjusted earnings of 63 cents per share, beating the Zacks Consensus Estimate by 23.5%. The bottom line also grew 31.2% year over year.
Revenues increased 25% year over year to $7.8 billion, surpassing the consensus mark by 7.9%. The company benefited from strength across the Agility Solutions and Reliability Solutions segments backed by a strong customer backlog.
Flex Ltd. Price, Consensus and EPS Surprise
Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote
Segment Details
The Flex Agility Solutions Group comprises the Communications & Enterprise Compute or CEC, Lifestyle and Consumer Devices businesses. The group’s revenues were up 16% year over year to $4 billion.
Agility continued to grow at a profitable rate. The increases in CEC and Lifestyle were partially offset by macroeconomic constraints.
The Flex Reliability Solutions Group comprises Health Solutions, Automotive and Industrial businesses. The group’s revenues went up 34% year over year to $3.3 billion. Demand remained healthy across the business segment, partly offset by the semiconductor shortage.
The Nextracker group’s revenue went up 40% year over year to $0.5 billion, owing to strong industry demand amid panel availability shortage.
Following the announcement, shares of the company are up 4.2% in the pre-market trading on Oct 27, 2022. In the past year, shares of the company have increased 7.8% against the industry’s decline of 46.1%.
Image Source: Zacks Investment Research
Operating Details
The non-GAAP gross margin remained unchanged on a year-over-year basis at 7.7% in the reported quarter.
The non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of revenues, were 2.9% which decreased 0.2% from the prior-year period.
The non-GAAP operating margin expanded 20 bps year over year to 4.8% on a year-over-year basis.
The Flex Agility Solutions Group’s adjusted operating margin was 4.3%, down 19 bps year over year. The Flex Reliability Solutions Group’s adjusted operating margin was 5.3%, up 17 bps. The Nextracker Group’s adjusted operating margin was 9.1%, up 187 bps.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash & cash equivalents stood at $2.45 billion compared with $2.65 billion as of Jul 1, 2022.
As of Sep 30, 2022, total debt (net of current portion) stood at $3.08 billion compared with $3.13 billion as of Jul 1, 2022.
In second-quarter fiscal 2023, the company generated cash flow from operating activities of $103 million and a negative adjusted free cash flow of $84 million.
In the quarter under review, the company repurchased shares worth $72 million.
Guidance
For third-quarter fiscal 2023, Flex expects revenues between $7.3 billion and $7.7 billion.
The company expects adjusted earnings of 57-63 cents per share. The adjusted operating income is projected to be between $345 million and $375 million.
For fiscal 2023, Flex expects revenues between $29.1 billion and $30.1 billion.
It expects adjusted earnings of $2.20-$2.35 per share. The adjusted operating margin is projected to be 4.6-4.8%.
Zacks Rank & Other Stocks to Consider
Flex currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader technology space are InterDigital (IDCC - Free Report) , Pure Storage (PSTG - Free Report) and Blackbaud (BLKB - Free Report) . Pure Storage, InterDigital and Blackbaud currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.45 per share, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 81.9%. Shares of IDCC have decreased 25.1% in the past year.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, rising 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 10.8% in the past year.
The Zacks Consensus Estimate for Blackbaud’s fiscal 2023 earnings is pegged at $2.55 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 3%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 8.6%. Shares of BLKB have decreased 24.6% in the past year.