Plexus Corp. (NASDAQ:PLXS) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. Plexus beat earnings, with revenues hitting US$852m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 10%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Plexus from five analysts is for revenues of US$3.37b in 2020, which is a reasonable 3.8% increase on its sales over the past 12 months. Statutory per share are forecast to be US$3.98, approximately in line with the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$3.34b and earnings per share (EPS) of US$4.09 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
Despite cutting their earnings forecasts, analysts have lifted their price target 10% to US$84.17, suggesting that these impacts are not expected to weigh on the stock's value in the long term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Plexus, with the most bullish analyst valuing it at US$93.00 and the most bearish at US$75.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Plexus's past performance and to peers in the same market. We can infer from the latest estimates that analysts are expecting a continuation of Plexus's historical trends, as next year's forecast 3.8% revenue growth is roughly in line with 4.5% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.1% per year. So it's pretty clear that Plexus is expected to grow slower than similar companies in the same market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Plexus. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Plexus going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether Plexus's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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