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Flex (FLEX) Up 23.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Flex (FLEX - Free Report) . Shares have added about 23.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Flex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
FLEX’s Q4 Earnings Top Estimates
FLEX reported fourth-quarter fiscal 2024 adjusted earnings of 57 cents per share, beating the Zacks Consensus Estimate by 3.6%. The bottom line grew 29.5% year over year.
Revenues (excluding Nextracker) decreased 11.7% year over year to $6.2 billion. However, it beat the consensus mark by 1.1%. Weakness across the Agility and Reliability Solutions segments led to the top-line contraction.
Net sales in fiscal 2024 totaled $26.4 billion (excluding Nextracker), down 7% year over year. Post the spin-off of Nextracker in the fourth-quarter fiscal 2024, its historical financials are now reported under discontinued operations.
Segment Details
The Flex Reliability Solutions Group includes Health Solutions, Automotive and Industrial businesses. Revenues were down 9.5% year over year to $2.93 billion. The downtick was caused by a slowdown in the Industrial unit, offset by growth in the automotive and health solutions.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute or CEC and Lifestyle and Consumer Devices businesses. Revenues were down year over year to $3.24 billion from the prior-year figure of $3.75 billion. Weak demand trends across CEC, along with Lifestyle and Consumer Devices businesses, negatively impacted sales.
Operating Details
Non-GAAP operating income increased 13.7% year over year to $333 million. Non-GAAP operating income for fiscal 2024 was $1.27 billion, up 2.8%.
Adjusted gross margin increased to 8.6% from 7% in the year-ago quarter.
Non-GAAP selling, general & administrative expenses totaled $199 million, on par with the prior-year level.
GAAP operating income decreased to $159 million from $223 million in the prior-year period.
Adjusted operating margins of the Flex Agility Solutions Group and the Flex Reliability Solutions Group were 5.6% and 5.8%, respectively, up from year-ago levels of 4.6% and 4.4%.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash & cash equivalents totaled $2.47 billion compared with $2.4 billion as of Dec 31, 2023.
As of Mar 31, 2024, total debt (net of current portion) was $3.26 billion compared with $3.29 billion as of Dec 31, 2023.
In fourth-quarter fiscal 2024, the company generated cash flow from operating activities of $679 million and an adjusted free cash flow of $602 million.
Guidance
For first-quarter fiscal 2025, Flex expects revenues to be between $5.6 billion and $6.2 billion.
Management expects adjusted earnings in the range of 37-45 cents per share, excluding 16 cents for restructuring charges, 7 cents for stock-based compensation expense and 3 cents for net intangible amortization. Adjusted operating income is projected to be between $240 million and $280 million.
For fiscal 2025, Flex expects revenues to be between $25.4 billion and $26.4 billion. It anticipates adjusted earnings in the range of $2.30-$2.50 per share, excluding 31 cents for stock-based compensation expense, 25 cents for restructuring charges and 13 cents for net intangible amortization.
Flex expects macro headwinds to persist throughout 2024, adversely impacting various end markets. An increase in global tax rates is also concerning. However, the company expects growth in certain key markets, such as cloud, power, auto and medical devices, to cushion the top-line performance.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -27.66% due to these changes.
VGM Scores
Currently, Flex has a strong 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Flex has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Flex belongs to the Zacks Electronics - Miscellaneous Products industry. Another stock from the same industry, Carrier Global (CARR - Free Report) , has gained 3.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Carrier Global reported revenues of $6.18 billion in the last reported quarter, representing a year-over-year change of +17.2%. EPS of $0.62 for the same period compares with $0.52 a year ago.
For the current quarter, Carrier Global is expected to post earnings of $0.85 per share, indicating a change of +7.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.4% over the last 30 days.
Carrier Global has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Flex (FLEX) Up 23.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Flex (FLEX - Free Report) . Shares have added about 23.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Flex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
FLEX’s Q4 Earnings Top Estimates
FLEX reported fourth-quarter fiscal 2024 adjusted earnings of 57 cents per share, beating the Zacks Consensus Estimate by 3.6%. The bottom line grew 29.5% year over year.
Revenues (excluding Nextracker) decreased 11.7% year over year to $6.2 billion. However, it beat the consensus mark by 1.1%. Weakness across the Agility and Reliability Solutions segments led to the top-line contraction.
Net sales in fiscal 2024 totaled $26.4 billion (excluding Nextracker), down 7% year over year. Post the spin-off of Nextracker in the fourth-quarter fiscal 2024, its historical financials are now reported under discontinued operations.
Segment Details
The Flex Reliability Solutions Group includes Health Solutions, Automotive and Industrial businesses. Revenues were down 9.5% year over year to $2.93 billion. The downtick was caused by a slowdown in the Industrial unit, offset by growth in the automotive and health solutions.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute or CEC and Lifestyle and Consumer Devices businesses. Revenues were down year over year to $3.24 billion from the prior-year figure of $3.75 billion. Weak demand trends across CEC, along with Lifestyle and Consumer Devices businesses, negatively impacted sales.
Operating Details
Non-GAAP operating income increased 13.7% year over year to $333 million. Non-GAAP operating income for fiscal 2024 was $1.27 billion, up 2.8%.
Adjusted gross margin increased to 8.6% from 7% in the year-ago quarter.
Non-GAAP selling, general & administrative expenses totaled $199 million, on par with the prior-year level.
GAAP operating income decreased to $159 million from $223 million in the prior-year period.
Adjusted operating margins of the Flex Agility Solutions Group and the Flex Reliability Solutions Group were 5.6% and 5.8%, respectively, up from year-ago levels of 4.6% and 4.4%.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash & cash equivalents totaled $2.47 billion compared with $2.4 billion as of Dec 31, 2023.
As of Mar 31, 2024, total debt (net of current portion) was $3.26 billion compared with $3.29 billion as of Dec 31, 2023.
In fourth-quarter fiscal 2024, the company generated cash flow from operating activities of $679 million and an adjusted free cash flow of $602 million.
Guidance
For first-quarter fiscal 2025, Flex expects revenues to be between $5.6 billion and $6.2 billion.
Management expects adjusted earnings in the range of 37-45 cents per share, excluding 16 cents for restructuring charges, 7 cents for stock-based compensation expense and 3 cents for net intangible amortization. Adjusted operating income is projected to be between $240 million and $280 million.
For fiscal 2025, Flex expects revenues to be between $25.4 billion and $26.4 billion. It anticipates adjusted earnings in the range of $2.30-$2.50 per share, excluding 31 cents for stock-based compensation expense, 25 cents for restructuring charges and 13 cents for net intangible amortization.
Flex expects macro headwinds to persist throughout 2024, adversely impacting various end markets. An increase in global tax rates is also concerning. However, the company expects growth in certain key markets, such as cloud, power, auto and medical devices, to cushion the top-line performance.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -27.66% due to these changes.
VGM Scores
Currently, Flex has a strong 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Flex has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Flex belongs to the Zacks Electronics - Miscellaneous Products industry. Another stock from the same industry, Carrier Global (CARR - Free Report) , has gained 3.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Carrier Global reported revenues of $6.18 billion in the last reported quarter, representing a year-over-year change of +17.2%. EPS of $0.62 for the same period compares with $0.52 a year ago.
For the current quarter, Carrier Global is expected to post earnings of $0.85 per share, indicating a change of +7.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.4% over the last 30 days.
Carrier Global has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.