Why is Weave (PLXS) up 12.4% since its last earnings report?

A month has passed since Plexus (PLXS) last reported earnings. Shares have risen about 12.4% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Plexus in line for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the key drivers.

Plexus’ second-quarter earnings and revenue beat estimates

Plexus reported fiscal second quarter 2024 adjusted earnings per share (EPS) of 94 cents, down 35.1% year-over-year. The Zacks Consensus Estimate is at 87 cents per share.

Revenues of $967 million were down 9.7% year-over-year. Financial performance was mainly impacted by weakness in the Healthcare/Life Sciences and Industrial sectors. Revenues surpassed the Zacks Consensus Estimate by 1.6%.

During the reported quarter, revenues from the Asia-Pacific and Americas regions declined by 11.2% and 21.1%, respectively. Revenues from Europe, the Middle East and Africa increased by 51.9%.

During the fiscal second quarter, Plexus won 32 production contracts with annual revenues of $255 million after full production commencement. Plexus also noted that its skilled manufacturing capacity pipeline now stands at $3.5 billion, down $459 million in the fiscal first quarter.

Market sector details

Industry revenues declined 4.8% year-over-year to $418 million, representing 43% of total revenues.

Healthcare/Life Sciences revenues declined 22.3% from the prior-quarter level to $379 million, representing 39% of total revenues.

Aerospace and defense revenues increased 18.1% year over year to $170 million, representing 17% of total revenues.

The company’s top 10 customers accounted for 48% of net revenue in the fiscal second quarter.

Operational details

GAAP gross profit declined 14.5% year-over-year to $88.1 million. Gross margin decreased 50 basis points (bps) to 9.1%.

Selling and administrative expenses increased 3.3% from the year-ago quarter to $47.6 million.

PLXS reported adjusted operating income of $40.5 million, down 28.9% year-over-year. Adjusted operating margin decreased 110 bps to 4.2%.

Balance sheet and cash flow

As of March 30, 2024, Plexus had cash and cash equivalents of $265.1 million compared to $231.9 million as of December 30, 2023.

As of March 30, 2024, PLXS had long-term debt and finance lease liabilities, net of the current portion, of $192 million compared to $192.1 million as of December 30, 2023.

The story continues

During the quarter, cash flow from operations was $87.8 million. Plexus saw free cash outflow of $64.9 million.

During the fiscal second quarter, PLXS repurchased shares worth $17.6 million. It has $38.1 million worth of shares remaining under its existing $50 million share repurchase authority.

Conductivity

Third-quarter fiscal 2024 revenues are expected to be between $960 million and $1 billion.

GAAP operating margin is expected to be between 3.9% and 4.3%. GAAP diluted EPS is expected to be in the range of 80 cents to 95 cents.

How have estimates changed since then?

It turns out that the review estimates have been trending upwards over the past month.

As a result of these changes, the consensus estimate moved by -17.02%.

VGM results

At this point, Plexus has a great Growth Score of A, although it lags well behind its Momentum Score of F. However, the stock is rated a B for value, putting it in the second quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. Notably, Plot carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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