Electronic Manufacturing Services provider
) is scheduled to announce its fiscal third quarter 2012 results
after the closing bell on July 18, 2012. In the run up to the
earnings release, we have noticed some analysts revising their
However, we note that Plexus has outperformed the Zacks
Consensus Estimate in the preceding four quarters by a positive
5.34%. We expect this trend to continue in the current quarter.
Previous Quarter Highlights
Plexus's top line inched down 1% in the second quarter on a
year-over-year basis. Weaker-than-expected sales from its
Networking/Communications segment and Medical segment, which more
than offset the robust performances from its Industrial/Commercial
and Defense/ Security/Aerospace segments, were responsible for the
However, Plexus's revenue of $573.5 million was within
management's guided range of $550.0 million to $580.0 million, and
also surpassed the Zacks Consensus Estimate of $566.0 million.
The company's bottom line shrunk 5.0% on a year-over-year basis
to 56 cents, primarily due to higher interest expense and tax rate
in the quarter. However, the reported earnings surpassed the Zacks
Consensus Estimate by a couple of cents and were within
management's guided range of 51 cents to 58 cents per share.
For further details please read:
Plexus Tops Estimates in 2Q
Estimate Revision Trend
In the last 30 days, two out of the eight analysts covering the
stock revised their estimates downward, with no upward revisions.
However, the Zacks Consensus Estimate for the third quarter of 2012
stayed at 63 cents, which is at the mid-point of management's
guided range of 60 cents and 66 cents per share.
For the third quarter, the Zacks Consensus revenue estimate is
$607.0 million, which is also within management's guidance range of
$590.0 million to $620.0 million.
Concerns in the network and communications segment of the
company, which is likely to be affected by
Juniper Networks Inc.
) dismal performance, keep the analysts cautious. Approximately 40%
of Plexus' communications revenue comes from Juniper. However,
analysts expect other segments like the Industrial, Medical, and
Aerospace to positively impact the top line on the back of new
The company's expansionary initiatives across Romania, Scotland,
Mexico, Malaysia and China are expected to affect the operating
cash flow in the short run. However, expanding into the
above-mentioned low-cost regions would be a positive for the
company in the longer run.
We believe that stabilizing end markets, new business
opportunities, particularly in the industrial/commercial and
medical sector and global expansion will drive growth over the long
term. We also believe that the gradual improvement in the U.S.
market will boost Plexus' top line going forward. However, intense
competition, continued component challenges and supply chain
constraints remain major concerns for Plexus over the long
Thus, we have Neutral recommendation on Plexus over the long
term (6-12 months). Currently, Plexus has a Zacks #3 Rank, which
translates into a short-term Hold rating.
JUNIPER NETWRKS (JNPR): Free Stock Analysis
PLEXUS CORP (PLXS): Free Stock Analysis Report
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