FLEX Gears Up to Report Q3 Earnings: What's in the Offing?

Flex Ltd FLEX is slated to report third-quarter fiscal 2024 results on Jan 31.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $6.73 billion, which suggests a decline of 13.2% from the year-ago quarter’s reported figure. The consensus mark for earnings per share (EPS) is pegged at 62 cents.

The company’s earnings beat the Zacks Consensus Estimate in all the last four quarters. It has a trailing four-quarter earnings surprise of 11%, on average.

Flex Ltd. Price and EPS Surprise

Flex Ltd. Price and EPS Surprise

Flex Ltd. price-eps-surprise | Flex Ltd. Quote

For third-quarter fiscal 2024, Total Flex (including Nextracker) revenues are expected to be between $6.5 billion and $6.9 billion. Management expects adjusted EPS in the range of 57-65 cents.

Core Flex (excluding Nextracker) revenues are expected to be between $5.9 billion and $6.3 billion. Management expects adjusted EPS in the range of 47-52 cents.

Factors to Note

The company’s performance in the third quarter is likely to have benefited from continued momentum in the automotive sector owing to secular demand in electrification and increasing demand for electric vehicles (EV).  

The company’s industrial segment is likely to have benefited from solid demand for EV charging, automation and cloud/critical power. The healthcare segment is expected to have benefited from several program ramps and long-term secular trends.

The company expects Communications & Enterprise Compute to benefit from secular growth trends in cloud and networking technology, mainly due to strong AI-driven cloud spending.

However, the company expects revenues in the Agility segment to be down mid-teens to low-20% due to near-term weakness in communications, enterprise IT, and consumer. The Reliability Solutions segment revenues are expected to have decreased from high-single digits to low-teens.

The lifestyle segment is likely to have suffered owing to weakness in consumer-related demand. Also, the UAW strike is a major concern for the automotive segment. Stiff competition and leveraged balance sheets are further concerns.

What Our Model Says

Our proven model does not predict an earnings beat for FLEX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you see below.

FLEX has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some stocks you may consider, as our proven model shows that these have the right mix of elements to beat estimates this time around.

Apple AAPL has an Earnings ESP of +1.96% and carries a Zacks Rank #3 at present. Apple is scheduled to release first-quarter fiscal 2024 results on Feb 1. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Apple’s to-be-reported quarter’s earnings and revenues is pegged at $2.09 per share and $117.5 billion, respectively. Shares of AAPL have gained 35% in the past year.

Alphabet GOOGL has an Earnings ESP of +2.26% and a Zacks Rank #3 at present. Alphabet is scheduled to release fourth-quarter 2023 results on Jan 30.

The Zacks Consensus Estimate for Apple’s to-be-reported quarter’s earnings and revenues is pegged at $1.60 per share and $70.7 billion, respectively. Shares of GOOGL have gained 47.1% in the past year.

Super Micro Computer SMCI has an Earnings ESP of +8.19% and a Zacks Rank #2 at present. Super Micro Computer is scheduled to release second-quarter fiscal 2024 results on Jan 29.

The Zacks Consensus Estimate for SMCI’s to-be-reported quarter’s earnings and revenues is pegged at $5.07 per share and $3.21 billion, respectively. Shares of SMCI have gained 508.2% in the past year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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