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Category: Stock Market and Flex
Date: 26 October 2019 Stock Price: $11.62 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Flex a provider of design, engineering, manufacturing and real time supply chain insights and logistics services.
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About Flex
Flex Ltd. is the Sketch-to-Scale® solutions provider that designs and builds intelligent products globally. With approximately 200,000 employees across 30 countries, Flex provides innovative design, engineering, manufacturing, real-time supply chain insight and logistics services to companies of all sizes across industries and markets.
Overview of Flex's 2nd quarter 2020 earnings report
Data below refers to quarterly data unless specified otherwise:
- Net sales: $6.088 billion (down from $6.662 billion for the same period of the previous year)
- Net sales decreased by -8.6% over the last 12 months
- Cost of sales: $5.785 billion (down from $6.233 billion for the same period of the previous year)
- Cost of sales decreased by -7.2% over the last 12 months
- Net loss: -$116.9 million (down from for the same period of the previous year)
- Diluted earnings per share: -$0.23 (up from $0.16 for the same period of the previous year)
- Diluted weighted-average shares outstanding: 512.692 million (down from $534.458 million for the same period of the previous year)
- Cash and cash equivalents: $1.815 billion
- Cash and cash equivalents per share: $3.54
- Cash and cash equivalents makes up 30.5% of Flex's market capital
- Cash and cash equivalents makes up 12.7% of Flex's total assets
- Accounts receivable: $2.414 billion
- Accounts receivable makes up 16.91% of Flex's total assets
- Goodwill of Flex: $1.062 billion
- Goodwill per share: $2.07
- Goodwill makes up 9.9% of Flex's total assets
- Stockholders equity in Flexs: $2.805 billion
- Stockholders equity per share in Flex: $5.47
- So Flex is trading at 2.12 times its stockholders equity per share which is within the expected range of between 2 and 4 most firms tend to trade at
Flex's management commentary on their 2nd quarter 2020 results
SAN JOSE, Calif.--(BUSINESS WIRE)-- Flex (NASDAQ: FLEX) today announced results for its second quarter ended September 27, 2019.
“This quarter was a step in the right direction and I am encouraged by our performance. We have focused on managing our mix, disciplined execution and design-led manufacturing to deliver strong adjusted operating margins and adjusted free cash flow. We will build on this momentum to drive profitable growth and shareholder value going forward,” said Revathi Advaithi, CEO of Flex.
Second Quarter Fiscal 2020 Highlights:
“This quarter was a step in the right direction and I am encouraged by our performance. We have focused on managing our mix, disciplined execution and design-led manufacturing to deliver strong adjusted operating margins and adjusted free cash flow. We will build on this momentum to drive profitable growth and shareholder value going forward,” said Revathi Advaithi, CEO of Flex.
Second Quarter Fiscal 2020 Highlights:
- Net Sales: $6.1 billion, year over year revenue down 9 percent
- GAAP Loss Before Income Taxes: ($96) million
- Adjusted Operating Income: $227 million
- GAAP Net Loss: ($117) million
- Adjusted Net Income: $158 million
- GAAP Net Loss Per Share: ($0.23)
- Adjusted EPS: $0.31
Flex (NASDAQ: FLEX) stock price history
The image below, obtained from Google, shows the stock price history of Flex Ltd over the last 5 years. And it's not been a very good time for Flex Ltd stockholders to be honest. 5 years ago the stock was trading at around $10.70 a stock and its currently trading at $11.61 a stock. That's a mere 8.49% return provided to Flex stockholders over the last 5 years. While the return of over 5 years is pretty weak, the opportunity cost of holding Flex stock instead of say Netflix that returned over 300% over a 5 year period becomes significant.
The stock of Flex is trading at a very close to its 52 week high of $12,54 and is far away from its 52 week low of $6.74 which to us is a clear indication that the short term momentum and sentiment of Flex stock is very positive at this point in time.
The stock of Flex is trading at a very close to its 52 week high of $12,54 and is far away from its 52 week low of $6.74 which to us is a clear indication that the short term momentum and sentiment of Flex stock is very positive at this point in time.
Recent coverage of Flex
The extract below discusses the latest news regarding Flex as obtained from TheStreet,com
Flex (NASDAQ: FLEX) today announced it was the recipient of six Cisco 2019 Supplier Appreciation Awards, including Supply Chain Operations' Supplier of the Year. Cisco unveiled the award winners at its 28th Annual Supplier Appreciation Event at the Santa Clara Convention Center in California. These awards recognize Flex for:
Flex (NASDAQ: FLEX) today announced it was the recipient of six Cisco 2019 Supplier Appreciation Awards, including Supply Chain Operations' Supplier of the Year. Cisco unveiled the award winners at its 28th Annual Supplier Appreciation Event at the Santa Clara Convention Center in California. These awards recognize Flex for:
- Supply Chain Operations' Supplier of the Year for differentiating itself by exceeding expectations across many areas of the business including quality, technology, responsiveness, flexibility, value creation, sustainability, and consistently demonstrating a high level of partnership.
- EMS Partner of the Year for displaying well rounded performance and partnership in FY19, while in the midst of a challenging operational and commercial climate.
- Excellence in Service and Responsiveness for providing mission critical solutions that enable a disruptive advantage to Cisco in areas including, but not limited to time-to-market, operational execution and long-term cost avoidance.
- Excellence in Repair for delivering the best scorecard performance over the past year, and delivering additional value to Cisco's repair process.
- Excellence in Partner IT for demonstrating the highest level of IT alignment on strategic programs, processes or initiatives that leverage collaborative technologies and solutions in Supply Chain.
- Excellence in Sustainability for distinguishing itself as visionary and collaborative in the social and environmental sustainability space.
Flex (NASDAQ: FLEX) latest stock valuation
So what is Flex stock worth based on the release of their latest earnings report? While it is hard to value a stock that is loss making (on a GAAP basis) there are other metrics that could be used to value the stock of Flex. Our usual fall back would be to use the stockholders equity per share as the based for our valuation of a stock. Based on Flex's latest earnings report our valuation models provide a target (full value) price for Flex stock at $7.93 a stock. We therefore believe that the stock of Flex is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $7.93. Therefore we believe a good entry point into Flex stock is at $7.10 or below. We expect the stock price of Flex to pull back from current levels to levels closer to our target (full value) price in coming weeks and months.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $7.93. Therefore we believe a good entry point into Flex stock is at $7.10 or below. We expect the stock price of Flex to pull back from current levels to levels closer to our target (full value) price in coming weeks and months.
Next earnings release date for Flex
It is expected that Flex's 3rd quarter of their 2020 fiscal year earnings report will be released in late January 2020.