Flex Ltd. FLEX reported fourth-quarter fiscal 2022 adjusted earnings of 52 cents per share, beating the Zacks Consensus Estimate by 18.2%. The bottom line also grew 6.13% year over year.
Revenues increased 9.3% year over year to $6.85 billion and surpassed the consensus mark by 6.47%. The company benefited from strength across the Agility Solutions and Reliability Solutions segments, along with a solid end-market focus on the back of emerging opportunities.
The Flex Agility Solutions Group comprises the Communications & Enterprise Compute or CEC, Lifestyle, and Consumer Devices businesses. The group’s revenues were up 4.3% year over year to $3.6 billion.
Agility continued to grow at a profitable rate. The increases in CEC and Lifestyle were partially offset by a planned decline in consumer devices.
The Flex Reliability Solutions Group comprises the Health Solutions, Automotive and Industrial businesses. The group’s revenues went up 12.3% year over year to $2.8 billion. Demand remained healthy across automotive and industrial verticals, and impressive execution against demand in Industrial helped boost revenues.
Flex Ltd. Price, Consensus and EPS Surprise
Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote
The non-GAAP gross margin contracted 80 basis points (bps) on a year-over-year basis to 7.3% in the reported quarter.
The non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of revenues was 3% remained unchanged from the prior-year period.
The non-GAAP operating margin also fell 60 bps year over year to 4.3%.
The Flex Agility Solutions Group’s adjusted operating margin was 4.2%, up 27 bps year over year. The Flex Reliability Solutions Group’s adjusted operating margin was 4.9%, down 74 bps.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash & cash equivalents stood at $2.96 billion compared with $2.57 billion as of Dec 31, 2021.
As of Mar 31, total debt (including the current portion) stood at $4.2 billion compared with $4.45 billion as of Dec 31, 2021.
In fourth-quarter fiscal 2022, the company generated cash flow from operating activities of $360 million and an adjusted free cash flow of $252 million.
For first-quarter fiscal 2023, Flex expects revenues between $6.6 billion and $7 billion.
It expects adjusted earnings of 44-50 cents per share. The adjusted operating income is projected between $285 million and $315 million.
For fiscal 2023, Flex expects revenues between $27.7 billion and $28.7 billion.
It expects adjusted earnings of $2.09-$2.24 per share. The adjusted operating income margin is projected to be 4.7-4.9%.
Zacks Rank & Other Stocks to Consider
Flex currently sports a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader industry are Avnet AVT, Hoya HOCPY and Perficient PRFT. Avnet currently sports a Zacks Rank #1 (Strong Buy), while Hoya and Perficient carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Avnet’s fiscal 2022 earnings is pegged at $6.83 per share, rising 20.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 37.2%.
Avnet’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 21.22%. Shares of Avnet have grown 7.6% in the past year.
The Zacks Consensus Estimate for Hoya’s fiscal 2022 earnings is pegged at $3.80 per share, declining 0.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 20.9%. Shares of Hoya have decreased 16.4% in the past year.
The Zacks Consensus Estimate for Perficient’s 2022 earnings is pegged at $4.30 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18%.
Perficient’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 4.8%. Shares of Perficient have grown 54.6% in the past year.
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