Good News! Plexus is doing well. ASND could be a 10% customer. They make ASND's GX550!
PLXS: Better Than Expected March-Period Results
09:53am EDT 17-Apr-98 Schroders (STEPHEN W. WOROBEL 212-492-7922) PLXS PXS
Emerging Growth Research at Schroder & Co. Inc.
MORNING MEETING HIGHLIGHTS
Plexus Corp. (PLXS-$21) NEUTRAL
Target: $23
Stephen W. Worobel (212) 492-7922
stephen.worobel@us.schroders.com April 17, 1998
Market Cap (Mil) $311 Price to Book Value 4.0x
Avg. Daily Trading Volume 187,200 Return on Equity 22.7%
Shares Out (Mil) 14.750 LT Debt to Total Capital nil
Float Shares (Mil) 11.630 Projected 5-Year EPS 30%
Growth
Institutional Holdings 30% 52-Week Range (NASDAQ) 38-12
F1997 F1998E F1999E
F1996 OLD NEW OLD NEW OLD NEW
Dec. $0.06 $0.20 $0.23A $0.23A $0.33
March 0.06 0.23 0.25 0.28A 0.36
June 0.18 0.28 0.31 0.32 0.41
Sept. 0.22 0.34 0.35 0.35 0.45
FY $0.52 $1.04 $1.14 $1.18 $1.55
Cal. $0.66 $1.08 $1.24 $1.28
P/E (FY) - - 18.0x 13.7x
P/E - - 16.6x
(Cal.) -
Notes:
Description: Plexus Corp. provides electronics manufacturing services to
original equipment manufacturers in the computer, medical, industrial,
telecommunications, and transportation electronics industries. The company
offers a full range of services including product development, printed
circuit board (PCB) design, material procurement and management, PCB and
higher level assembly, functional and in-circuit testing, final system box
build, and distribution.
Better Than Expected March-Period Results
- Plexus reported 2Q:F98 EPS of $0.28 versus our estimate of $0.25 and
$0.23 last year.
- Gross margin expansion fuels earnings growth.
- We are increasing our F1998 EPS estimate to $1.18 from $1.14 and our
F1999 EPS estimate remains at $1.55.
- We are raising our 12-month target price to $23 from $21.
- We maintain our NEUTRAL rating on Plexus.
- Plexus reported better than expected March-period results. The company
posted EPS of $0.28 versus our estimate of $0.25 and $0.23 last year.
Revenues were $97.7 million, increasing slightly over the year-ago period.
Gross margins expanded to 12.1% from 10.8% year over year and 10.7%
sequentially. The higher gross margins reflect the shift in product mix to
higher margin products and the company's cost reduction efforts.
- Asset management is improving. Inventory turns improved to 7.5x from
7.3x in the first quarter. However, DSOs rose to 43 from 40 on a sequential
basis. The company generated free cash flow of $7 million. Plexus has a
cash position of $10.7 million and no debt. The company's current ratio is
2.2.
- We are raising our F1998 EPS estimate to $1.18 from $1.14 and our
F1999 EPS estimate remains at $1.55. The company's new customers, Ascend
and Ohmeda, are ramping up production. Moreover, Ascend could potentially
be a 10% customer in the third quarter from 5% in the second quarter. We
expect gross margins to widen from 11.4% in F1997 to 12.1% in F1998 and
13.2% in F1999.
- We maintain our NEUTRAL rating on Plexus. The stock is trading at
16.6x our calendar 1998 EPS estimate of $1.28. Valuing PLXS shares at 18x
our calendar 1998 EPS estimate, our 12-month target price is $23.
Schroder & Co. Inc. usually makes a trading market in the common stock of
Plexus Corp. |
