Flex has reported $0.16 EPS Q1. Estimates are for $0.28-0.31 EPS for the upcoming Q. These are non-adjusted. Adjusted they expect them to be a nickel light = $0.23-0.26. For the first half of the year in bad market conditions, if they make their lowest guidance of $0.23, they have $0.39 for one half of the year. I think you would agree that FLEX's management does a very good job of lowering their guidance so that they make their guidance range every time. So I actually do think they will be sitting at or above $0.39 for the first half of the year. I think that Q3 and Q4 will be strong, traditionally speaking, the second half of the year earnings have been higher than the first for FLEX.
I think your estimates are very fair but FLEX will not be have to be lucky to hit your range. With $0.39 in the bag, and only $0.05 off for adjustments in the next 2Q's, I think they'll be ok. If you look at Q1, they took $0.11 off EPS in adjustments. I look at Q3 and Q4 to report similarly to Q1, but with $0.05 off EPS in adjustments. Reporting Q3 and Q4 at $0.27 (exactly the same as Q1) with $0.05 off, they report $0.44 for the second half of the year and $0.83 EPS for the year.
My assumptions are (and could be flawed) that the company will meet its guidance in Q2 and in Q2-4, adjustments will only be a nickel light. FLEX stated this in the conference call so until I am proved otherwise by them, I will make all my estimates $0.05 light. Even at $0.06 light, they sit at $0.81 for the year.
There are some "X" factors here that I believe to be in FLEX's favor as well. Any buying back of stock will increase EPS, and if they complete the buyback by Q4, the Q4 EPS will be up by the % shares bought back. In addition, EPS in Q1 were lightened because there were more outstanding shares floating than usual. If FLEX returns to its "normal" levels of float, this could increase EPS as well. Another thing is the HPQ deal should start to kick in in Q3 or Q4. I expect this to add a little to earnings those quarters. Finally, for every Q from here on in, I have assumed that non-adjusted EPS will remain at the same level of 0.27-0.28/Q. With the HPQ deal looming, I don't think non-adjusted EPS with stay flat. There are several branches that appeared last Q to be growing at very nice rates, even if the grow slows, as long as it doesn't go down, they should be fine.
So basically, if FLEX is unable to grow their business, I still think they will have a PE of less than 12 at $9/share and $0.80 EPS. Now, I'm not aware of their historical PE. Do you or anyone else know their historical PE offhand? I think it all depends on if FLEX is able to grow out its segments. I tend to agree with most who think this Q won't be good, but think they still hit their guidance, $0.23. After all, if they miss this #, they get no stock to sell in the spring.
well...if you listen to DELL, there is slowdown in asia, and across the world....I am not so sure flex will have no problem beating numbers..so...even if they come in at .90, you have a 9.00-10.00 stock at best....