On Sep 28, 2013, Zacks Investment Research upgraded Plexus Corp. (PLXS) to a Zacks Rank #1 (Strong Buy). With a strong return of 51.8% over the past six months and a positive estimate revision trend, Plexus is an attractive investment opportunity.
Why the Upgrade?
Better-than-expected third quarter results, robust new business opportunities, particularly in the industrial/commercial and medical sector and global expansion will drive growth over the long term. New business wins are expected to drive sequential growth in revenues throughout fiscal year 2014, which will result in modest year-over-year growth.
Plexus believes that the completion of the Wisconsin consolidation project, expansion in Mexico and strong new business wins particularly in engineering solutions will help the company to achieve its long term revenue target of $3.0 billion.
Plexus expects better ROIC performance, improving margins (the disengagement from Juniper will boost product mix and result in consolidation of production facilities in low-cost areas) and aggressive share buyback to drive fiscal 2014 earnings growth.
Management expects to achieve long term operating margin of 5.0%, driven by an improving supply chain, facility consolidations, better sector mix and strong growth from engineering solutions.
Plexus maintained its fourth quarter revenue guidance of $545.0 to $575.0 million. Earnings outlook was upped to 66 to 70 cents (from the prior outlook of 60 to 66 cents) for the fourth quarter.
The Zacks Consensus Estimate for fourth quarter increased 13.6% to 67 cents per share as most of the estimates were revised higher over the last 90 days. The Zacks Consensus Estimate for fiscal 2013 increased 7.9% to $2.32 per share over the last 90 days. For fiscal 2014, the Zacks Consensus Estimate increased 7.1% to $2.56 per share.
The long-term expected earnings growth rate for Plexus is 10.0%.
Other Stocks to Consider:
Investors can also consider other stocks that are doing well right now. These include Infoblox Inc (BLOX), TIBCO Software (TIBX) and Kimball International (KBALB). While Infoblox and TIBCO carry a Zacks Rank #1 (Strong Buy), Kimball carries a Zacks Rank #2 (Buy).
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