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Plexus (PLXS) Hits Fresh High: Is There Still Room to Run?

Shares of Plexus (PLXS) have been strong performers lately, with the stock up 15.1% over the past month. The stock hit a new 52-week high of $94.66 in the previous session. Plexus has gained 19.5% since the start of the year compared to the 5.9% move for the Zacks Computer and Technology sector and the 21.3% return for the Zacks Electronics - Manufacturing Services industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 20, 2021, Plexus reported EPS of $1.23 versus consensus estimate of $1.11 while it beat the consensus revenue estimate by 0.02%.

For the current fiscal year, Plexus is expected to post earnings of $4.85 per share on $3.48 billion in revenues. This represents a 12.53% change in EPS on a 2.6% change in revenues. For the next fiscal year, the company is expected to earn $5.33 per share on $3.77 billion in revenues. This represents a year-over-year change of 9.83% and 8.48%, respectively.

Valuation Metrics

Plexus may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Plexus has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 19.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.3X versus its peer group's average of 9.3X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Plexus currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Plexus meets the list of requirements. Thus, it seems as though Plexus shares could have a bit more room to run in the near term.

How Does Plexus Stack Up to the Competition?

Shares of Plexus have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Celestica (CLS), Sanmina (SANM), and Rogers (ROG), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 9% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Plexus, even beyond its own solid fundamental situation.

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Plexus Corp. (PLXS): Free Stock Analysis Report
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