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Flex (FLEX) Up 2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Flex (FLEX - Free Report) . Shares have added about 2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
FLEX’s Q1 Earnings Top Estimates
Flex reported first-quarter fiscal 2025 adjusted earnings per share (EPS) of 51 cents, beating the Zacks Consensus Estimate by 24.4%. The bottom line compared favorably with the prior-year quarter's 47 cents per share.
Revenues fell 8% year over year to $6.3 billion. However, it surpassed the consensus mark by 7%. The downside resulted from a slowdown in the Agility and Reliability Solutions business segments.
Segment Details
The Flex Reliability Solutions Group encompasses Health Solutions, Automotive and Industrial businesses. Revenues were down 10% year over year to $2.9 billion. The downtick is caused by weak macro trends in core industrial areas, offset by momentum in automotive, cloud, data center power and healthcare devices.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute or CEC and Lifestyle and Consumer Devices businesses. Revenues were down 5.5% to $3.4 billion from the prior-year figure of $3.6 billion. Positive trends were observed in cloud amid softness in enterprise IT and non-cloud-related networks.
Operating Details
Non-GAAP gross margin increased 50 basis points (bps) on a year-over-year basis to 7.8% in the reported quarter.
Non-GAAP operating income came in at $306 million, up from the prior-year level of $293 million. Non-GAAP operating margin expanded 50 bps to 4.8%.
Non-GAAP selling, general & administrative expenses totaled $189 million, down 9% year over year.
The adjusted operating margins of the Flex Reliability Solutions Group was 5%, on par with the prior year's level. Adjusted operating margins of the Flex Agility Solutions Group improved 120 bps to 5.3%.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash & cash equivalents and long-term debt (net of current portion) were $2.24 billion and $2.6 billion, respectively, compared with $2.3 billion and $3.3 billion a year ago.
In first-quarter fiscal 2025, the company generated cash flow from operating activities of $340 million and an adjusted free cash flow of $232 million.
Guidance
For second-quarter fiscal 2025, Flex expects revenues to be between $6.2 billion and $6.8 billion.
Management expects adjusted earnings in the range of 52-60 cents per share, excluding 1 cent for net restructuring charges, 8 cents for stock-based compensation expense and 3 cents for net intangible amortization. Adjusted operating income is projected to be between $310 million and $350 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 32 cents for stock-based compensation expense, 25 cents for net restructuring charges and 13 cents for net intangible amortization.
Management further anticipates momentum in key end-markets - cloud, power, auto and medical devices. However, rising global tax rates and a dynamic macro backdrop remain headwinds.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Flex has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Flex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Flex (FLEX) Up 2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Flex (FLEX - Free Report) . Shares have added about 2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
FLEX’s Q1 Earnings Top Estimates
Flex reported first-quarter fiscal 2025 adjusted earnings per share (EPS) of 51 cents, beating the Zacks Consensus Estimate by 24.4%. The bottom line compared favorably with the prior-year quarter's 47 cents per share.
Revenues fell 8% year over year to $6.3 billion. However, it surpassed the consensus mark by 7%. The downside resulted from a slowdown in the Agility and Reliability Solutions business segments.
Segment Details
The Flex Reliability Solutions Group encompasses Health Solutions, Automotive and Industrial businesses. Revenues were down 10% year over year to $2.9 billion. The downtick is caused by weak macro trends in core industrial areas, offset by momentum in automotive, cloud, data center power and healthcare devices.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute or CEC and Lifestyle and Consumer Devices businesses. Revenues were down 5.5% to $3.4 billion from the prior-year figure of $3.6 billion. Positive trends were observed in cloud amid softness in enterprise IT and non-cloud-related networks.
Operating Details
Non-GAAP gross margin increased 50 basis points (bps) on a year-over-year basis to 7.8% in the reported quarter.
Non-GAAP operating income came in at $306 million, up from the prior-year level of $293 million. Non-GAAP operating margin expanded 50 bps to 4.8%.
Non-GAAP selling, general & administrative expenses totaled $189 million, down 9% year over year.
The adjusted operating margins of the Flex Reliability Solutions Group was 5%, on par with the prior year's level. Adjusted operating margins of the Flex Agility Solutions Group improved 120 bps to 5.3%.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash & cash equivalents and long-term debt (net of current portion) were $2.24 billion and $2.6 billion, respectively, compared with $2.3 billion and $3.3 billion a year ago.
In first-quarter fiscal 2025, the company generated cash flow from operating activities of $340 million and an adjusted free cash flow of $232 million.
Guidance
For second-quarter fiscal 2025, Flex expects revenues to be between $6.2 billion and $6.8 billion.
Management expects adjusted earnings in the range of 52-60 cents per share, excluding 1 cent for net restructuring charges, 8 cents for stock-based compensation expense and 3 cents for net intangible amortization. Adjusted operating income is projected to be between $310 million and $350 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 32 cents for stock-based compensation expense, 25 cents for net restructuring charges and 13 cents for net intangible amortization.
Management further anticipates momentum in key end-markets - cloud, power, auto and medical devices. However, rising global tax rates and a dynamic macro backdrop remain headwinds.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Flex has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Flex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.