Bearish stock to watch: Plexus Corp. (NASDAQ: PLXS)

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Plexus Corp. (NASDAQ: PLXS) stock fell over 5.4% on 18th July, 2019 (as of 11:43 am GMT-4; Source: Google finance) after the company posted mixed results for the third quarter of FY 19. For the three months ended June 29, 2019, cash flows provided by operations were $41.5 million, less capital expenditures of $20.0 million, resulting in positive free cash flow of $21.5 million. ROIC for the fiscal third quarter was 12.9%. The Company’s weighted average cost of capital for fiscal 2019 is 9.0%. ROIC for the fiscal third quarter less the Company’s weighted average cost of capital resulted in an economic return of 3.9%.

PLXS in the third quarter of FY 19 has reported the adjusted earnings per share of 81 cents, missing the analysts’ estimates for the adjusted earnings per share of 82 cents, as per Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 10 percent to $800 million in the third quarter of FY 19, beating the analysts’ estimates for revenue by 2.49%.

Additionally, PLXS won 23 manufacturing programs during the third quarter representing $227 million in annualized revenue when fully ramped into production. Trailing four quarter manufacturing wins total $938 million in annualized revenue when fully ramped into production.

During the fiscal third quarter, the company continued to execute the capital allocation strategy by repatriating approximately $37 million of offshore cash.  Since the enactment of U.S. tax reform in the last fiscal year, the company have brought back over $500 million.  The company had purchased $44.4 million of the shares at an average price of $56.61 per share under the existing share repurchase program, which was primarily funded with repatriated cash.

For the fourth quarter, PLXS expects the revenue to be in the range of $760 to $800 million and GAAP EPS in the range of $0.81 to $0.91.

Meanwhile, PLXS announced the renovation of its facility in Livingston, Scotland. This investment supports continued growth and technology offerings, in response to increased demand, for customers in European markets. This renovation completes Plexus’ multi-year investment to expand and upgrade all eight of its global engineering facilities. Plexus’ Engineering Solutions, rapid prototyping factory and electrical and mechanical laboratories are co-located in this purpose-built facility. Within the facility, Plexus continues to further expand engineering services, specifically within analogue and digital circuit design, mechanical modelling and prototyping, industrial design and internet of things (IoT) platform development. This enables Plexus to maintain its leadership position within the fast-paced electronic engineering and manufacturing industry.

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