Despite rising greater than 2.5x from its low in March, on the present worth of $16 per share, we c
Despite rising greater than 2.5x from its low in March, on the present worth of $16 per share, we consider Flex Ltd. inventory (NASDAQ: FLEX) has additional upside potential. Flex Ltd. is an electronics contract producer, and is likely one of the main electronics OEM and design producers. Flex inventory has elevated from $6 to $16 off the latest backside, considerably greater than the S&P which elevated by over 60% from its lows. Nevertheless, we consider that Flex inventory may cross its early-2018 excessive, rising over 20% from its present degree to the touch $20, pushed by expectations of rising demand and powerful Q2 2021 outcomes regardless of the pandemic. Our dashboard What Elements Drove 114% Change In Flex Ltd. Inventory Between 2018 And Now? has the underlying numbers behind our considering.
The inventory worth rise since 2018-end got here regardless of a 1% drop in income per share, as a 5% drop in revenues worn out a 4% drop within the excellent share depend. Income dropped from $25.Four billion in 2018 to $24.2 billion in 2020 (FLEX’s fiscal yr ends in March).
Flex’s P/S (price-to-sales) a number of rose from 0.16x in 2018 to 0.25x by 2019 finish, and has since additional jumped to 0.34x, on the again of robust Q1 and Q2 2020 outcomes. We consider that the corporate’s P/S ratio has the potential to rise within the close to time period on expectations of continuous demand progress and favorable shareholder return coverage, thus driving the inventory worth greater.
The place Is The Inventory Headed?
The worldwide unfold of coronavirus and the ensuing lockdowns in early 2020 have harm industrial and manufacturing actions. The pandemic has harm Flex’s revenues with Q1 2021 revenues coming in at $5.2 billion vs $6.2 billion for a similar interval final yr. Nevertheless, in Q2 2021, revenues improved to $6 billion, down marginally from $6.1 billion in Q2 2020. Additional, a drop in value of gross sales noticed gross margins soar from 3.1% to six.6%. This, mixed with barely decrease working bills, helped the corporate put up a web revenue of $113 million in Q2 ’21, a powerful turnaround from the online lack of $117 million in Q2 ’20. We consider that going ahead, regular income progress mixed with continued robust execution, will assist Flex Ltd. drive profitability up even additional.
We anticipate this to drive up the corporate’s P/S a number of, and consider that Flex inventory can rise over 20% from present ranges, to the touch $20.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.