Plexus (PLXS) Up 1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Plexus (PLXS). Shares have added about 1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Plexus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Plexus Q3 Earnings Top Estimates
Plexus reported third-quarter fiscal 2023 adjusted earnings per share (EPS) of $1.32, which decreased 0.8% year over year. The Zacks Consensus Estimate for the same was pegged at $1.15 per share.
Revenues of $1.021 billion increased 4.1% year over year. The top-line performance gained mainly from solid momentum in Healthcare/Life Sciences and Aerospace/Defense sectors. Revenues missed the Zacks Consensus Estimate by 0.4%.
In the reported quarter, revenues from Asia-Pacific declined 2.4%. Revenues from Europe, the Middle East and Africa, and the Americas rose 25% and 8.2%, respectively.
In the fiscal third quarter, Plexus won 30 manufacturing contracts worth $321 million in annualized revenues when fully ramped into production. Trailing four-quarter manufacturing wins totaled more than $968 million in annualized revenues. Plexus also noted that a funnel of qualified manufacturing opportunities now amounted to $4 billion, down $237 million from the fiscal second quarter.
Market Sector Details
Industrial revenues were down 5.7% year over year to $428 million, contributing 42% to total revenues.
Healthcare/Life Sciences’ revenues jumped 12.5% from the year-ago quarter’s levels to $451 million, contributing 44% to total revenues.
Revenues from Aerospace/Defense increased 13.5% year over year to $143 million, contributing 14% to total revenues.
The top 10 customers of the company accounted for 51% of net revenues for the fiscal third quarter.
Operating Details
Gross profit on a GAAP basis increased 0.1% year over year to $93.6 million.
Gross margin contracted 30 basis points (bps) to 9.2%.
Selling and administrative expenses decreased 3.9% from the year-ago quarter to $42.3 million.
PLXS reported an adjusted operating income of $51.3 million, up 3.5% year over year. Adjusted operating margin contracted 10 bps to 5%.
Balance Sheet & Cash Flow
As of Jul 1, 2023, Plexus had cash & cash equivalents worth $252.9 million compared with $269.7 million as of Apr 1, 2023.
As of Jul 1, 2023, PLXS had long-term debt and finance lease obligations, net of the current portion of $187.5 million compared with $188.7 million as of Apr 1, 2023.
In the quarter under review, the cash flow from operations was $18.8 million. Plexus reported a free cash outflow of $11.5 million.
PLXS repurchased shares worth $13.5 million at an average price of $90.49 per share in the fiscal third quarter. It has shares worth $9.1 million left under its existing $50 million share repurchase authorization.
Guidance
For fourth-quarter fiscal 2023, revenues are projected to be between $1.00 billion and $1.04 billion.
GAAP operating margin is expected to be between 4.7% and 5.2%. GAAP EPS is expected to be in the range of $1.18-$1.36.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -7.34% due to these changes.
VGM Scores
At this time, Plexus has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. 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. Notably, Plexus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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