Flex (FLEX, Financial) has ramped up its production capabilities for data center power products at its advanced facility in Columbia, South Carolina. This expansion aims to meet the increasing demands in the AI-driven power infrastructure sector, allowing for reduced lead times for data center operators across the U.S. The Columbia facility, boasting a dedicated capacity of 134,000 square feet, is complemented by the recent inauguration of a 400,000 square feet manufacturing site in Dallas, Texas. Both locations are instrumental in producing critical power products at a scalable rate for the expanding domestic market.
Flex's strategic growth has seen its global manufacturing footprint expand by over eight million square feet since fiscal year 2024, which includes four new strategic sites primarily located in the United States. This growth, fueled by acquisitions and organic expansions, contributes to the company’s regionalized manufacturing strategy. By March 31, 2025, Flex’s U.S. operations will cover more than 13 million square feet across 17 sites. Alongside its approximately nine million square feet in Mexico, Flex maintains one of North America's most extensive advanced manufacturing networks.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Flex Ltd (FLEX, Financial) is $44.03 with a high estimate of $52.00 and a low estimate of $35.00. The average target implies an upside of 25.02% from the current price of $35.22. More detailed estimate data can be found on the Flex Ltd (FLEX) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, Flex Ltd's (FLEX, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Flex Ltd (FLEX, Financial) in one year is $20.70, suggesting a downside of 41.23% from the current price of $35.22. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Flex Ltd (FLEX) Summary page.
FLEX Key Business Developments
Release Date: January 29, 2025
- Revenue: $6.6 billion, up 2% year over year.
- Operating Margin: 6.1%, a record high for the company.
- EPS (Earnings Per Share): $0.77, a 43% increase year over year.
- Gross Profit: $610 million, a new quarterly record.
- Gross Margin: 9.3%, up 150 basis points.
- Adjusted Operating Income: $399 million, up 120 basis points year over year.
- Free Cash Flow: $306 million for the quarter.
- Inventory Reduction: Net inventory down 4% sequentially and 20% year over year.
- Data Center Business Growth: 45% year over year.
- Stock Repurchase: $200 million in Q3, totaling over $950 million fiscal year-to-date.
- Cash Balance: Approximately $2.3 billion at the end of Q3.
- Full-Year Revenue Guidance: $25.4 billion to $25.8 billion.
- Full-Year Adjusted EPS Guidance: $2.57 to $2.65 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Flex Ltd (FLEX, Financial) achieved a record quarterly operating margin of 6.1% and EPS of $0.77, marking the first time operating margins exceeded 6%.
- The company reported a 45% year-over-year growth in its data center business, driven by strong demand in hyperscale cloud integration and AI-driven cloud expansion.
- Flex Ltd (FLEX) successfully closed acquisitions of JetCool and Crown Systems, enhancing its data center portfolio with advanced cooling and power capabilities.
- The company joined the S&P MidCap 400, reflecting its growth and market presence.
- Flex Ltd (FLEX) demonstrated strong cash flow management, with $306 million in free cash flow for the quarter and a year-to-date total of $757 million, positioning it well to meet its full-year target of $800 million-plus.
Negative Points
- The automotive segment faced challenges due to a weak macro environment, impacting overall revenue growth.
- There is uncertainty regarding the impact of tariffs and potential broader macroeconomic effects on slowing volumes, which Flex Ltd (FLEX) is closely monitoring.
- The company anticipates fluctuations in operating margins in the coming quarters, despite achieving a 6% margin this quarter.
- Flex Ltd (FLEX) is experiencing softer near-term trends in the automotive sector, which could affect future performance.
- The company faces labor constraints in the US, which could impact its ability to expand manufacturing operations domestically.
