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Plexus (PLXS) Down 8.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Plexus (PLXS - Free Report) . Shares have lost about 8.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Plexus 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 drivers.

Plexus' Q1 Earnings Top Estimates

Plexus reported first-quarter fiscal 2025 adjusted earnings per share (EPS) of $1.73, up 40.7% year over year. The figure outpaced the Zacks Consensus Estimate of $1.59 per share.

Revenues of $976.1 billion declined 0.7% year over year and missed the Zacks Consensus Estimate by 0.8%. Management expected revenues to be between $960 million and $1 billion.

The top-line performance was affected by weakness in Healthcare/Life Sciences and Aerospace/Defense sectors.

In the reported quarter, revenues from the Americas and Europe, the Middle East and Africa declined 11.6% and 16.5%, respectively. Revenues from Asia-Pacific jumped 9.8% to $607 million.

In the fiscal first quarter, Plexus won 30 manufacturing programs, which are estimated to contribute $212 million in annualized revenues once fully ramped into production.

Market Sector Details

Industrial sector’s revenues rose 1.6% year over year to $442 million, mainly due to higher near-term demand with various customers. This contributed 46% to total revenues. However, management also noted that demand instability across broader industrial sectors is offsetting gains in the semiconductor capital equipment vertical.

Owing to demand softness, Healthcare/Life Sciences’ revenues declined 1.8% from the year-ago quarter’s levels to $374 million. This contributed 38% to total revenues.

Revenues from Aerospace/Defense declined 4.2% year over year to $160 million. This contributed 16% to total revenues. Reductions in commercial-aerospace production rates and defense-program ramp delays were major headwinds, affecting segmental performance.

The company’s top 10 customers accounted for 51% of net revenues in the fiscal first quarter.

Operating Details

Gross profit on a GAAP basis increased 14.2% year over year to $100.7 million. Gross margin was 10.3% from 9% year over year.

Selling and administrative expenses increased 14.2% from the year-ago quarter’s actuals to $49.1 million.

Adjusted operating margin expanded 90 basis points to 6%.

Balance Sheet & Cash Flow

As of Dec. 28, 2024, Plexus had cash & cash equivalents worth $317.2 million compared with $345.1 million as of Sept. 28.

As of Dec. 28, 2024, Plexus had long-term debt and finance lease obligations, net of the current portion of $88.7 million compared with $90 million as of Sept. 28.

For the quarter under review, cash flows from operations was $53.6 million. Plexus reported a free cash flow of $27 million.

The company repurchased $12.8 million of its shares at an average price of $151.19 per share under Plexus’ repurchase program. Plexus has $37.2 million available under its existing $50 million buyback authorization.

Outlook

For second-quarter fiscal 2025, revenues are anticipated to be between $960 million and $1 billion.

Non-GAAP operating margin is expected to be between 5.3% and 5.7%. Non-GAAP EPS is expected to be in the band of $1.46-$1.61.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, Plexus has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 Plexus has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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