Plexus has been on fire lately. In the past six months alone, the company’s stock price has rocketed 88.4%, reaching $263.07 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Following the strength, is PLXS a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Does Plexus Spark Debate?
With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.
Two Positive Attributes:
1. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Plexus’s revenue to rise by 17.7%, an improvement versus its 4.4% annualized growth for the past five years. This projection is eye-popping and indicates its newer products and services will fuel better top-line performance.
2. EPS Moving Up Steadily
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Plexus’s EPS grew at 8.7% compounded annual growth rate over the last five years, higher than its 4.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to be Careful:
Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Plexus’s 4.4% annualized revenue growth over the last five years was mediocre. This wasn’t a great result compared to the rest of the business services sector, but there are still things to like about Plexus.
Final Judgment
Plexus’s positive characteristics outweigh the negatives, and with the recent rally, the stock trades at 30.5× forward P/E (or $263.07 per share). Is now the time to buy despite the apparent froth? See for yourself in our in-depth research report, it’s free.
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