FLEX Q1 Earnings Beat on CPI Strength, FY27 View Raised

However, shares of the company declined around 5% in the pre-market trading session today. In the past year, the stock has surged 121.8% compared with the Zacks Electronics - Miscellaneous Products industry’s growth of 58.4%.

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FLEX Gains From All Three Segments

Regulated Manufacturing Solutions revenues rose 12% year over year to $2.67 billion. Industrial demand benefited from energy infrastructure and warehouse automation, while connected medical devices supported Healthcare.

Integrated Technology Solutions revenues increased 20% to $3.06 billion, aided by stronger advanced networking demand. Cloud and Power Infrastructure generated $2.20 billion, supported by robust demand across Power and Cloud & Cooling.

Cloud and Power Infrastructure adjusted operating income rose 38% to $214 million, with margin increasing 20 basis points to 9.7%. Regulated Manufacturing Solutions income climbed 40% to $176 million, while Integrated Technology Solutions income advanced 21% to $158 million.

Flex Expands Margins on Favorable Mix

Adjusted gross profit increased 28% to $761 million. Adjusted gross margin expanded 50 basis points to 9.6%, reflecting the benefit of the company’s mix and operating execution.

Adjusted operating income climbed 35% to $534 million, while adjusted operating margin improved 70 basis points to 6.7%. GAAP selling, general and administrative expenses rose to $334 million from $233 million. Legal and other charges totaled $67 million, including $53 million primarily tied to the planned spin-off and $14 million of acquisition costs.

FLEX Cash Flow Reflects Heavy Investment

Cash provided by operating activities was $276 million, down from $399 million a year earlier. Changes in working capital and other items used $149 million against a $65 million contribution in the prior-year quarter.

Net capital expenditures were $235 million, leaving free cash flow of $41 million. Free cash flow included a $24 million negative impact from separation costs related to the Cloud and Power Infrastructure spin-off.

Flex’s Balance Sheet Changes With Deal Activity

Cash and cash equivalents increased to $2.84 billion as of June 26, 2026, from $2.39 billion at fiscal 2026-end. Long-term debt rose to $5.22 billion from $3.75 billion over the same period.

The quarter included $1.13 billion of cash used for business acquisitions and $90 million of proceeds from divestitures. Flex raised $2.83 billion through bank borrowings and long-term debt and repaid $1.39 billion of borrowings and other financing liabilities.

FLEX Issues Solid Q2 Guidance

For the second quarter of fiscal 2027, FLEX expects revenues of $7.95-$8.25 billion. Adjusted operating income is projected between $535 million and $565 million, with adjusted earnings of $1.00-$1.07 per share.

Management expects Regulated Manufacturing Solutions revenues to rise in the mid-single to high-single digits. Integrated Technology Solutions is projected to grow in the high-single to low-double digits, while Cloud and Power Infrastructure is expected to increase 45-55%.

Flex Raises Fiscal 2027 Outlook

Flex raised its fiscal 2027 revenue guidance to $33.7-$35.2 billion from $32.3-$33.8 billion. The adjusted operating margin outlook was tweaked to 7.0-7.2% from 7.0-7.1%.

Adjusted earnings guidance was raised to $4.42-$4.74 per share from $4.21-$4.51. The company now expects Cloud and Power Infrastructure revenues to grow 65-75%, while free cash flow conversion is projected at roughly 40%, down from about 60% due to one-time separation costs.

FLEX’s Zacks Rank

Flex currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performances

SAP SE SAP reported second-quarter 2026 non-IFRS earnings per share of €1.59 ($1.85), which increased 6% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $2.

Despite macroeconomic uncertainty, SAP reported total revenues on a non-IFRS basis of €9.9 billion ($11.5 billion), which increased 9% year over year (up 11% at constant currency or cc). The Zacks Consensus Estimate was pegged at $11.4 billion.

America Movil, S.A.B. de C.V. AMX reported net income per ADR of 47 cents for the second quarter of 2026, up from 38 cents in the prior-year quarter. The earnings figure missed the Zacks Consensus Estimate of 52 cents. Total quarterly revenues rose 3.1% to Mex$241,071 million, driven by rapid momentum across the Service and Equipment segments.

BlackBerry Limited BB reported first-quarter fiscal 2027 non-GAAP earnings per share of 4 cents. The figure beat the company’s estimate of 2-3 cents. In the year-ago quarter, it reported a non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 3 cents per share. BlackBerry generated $152.9 million in fiscal first-quarter revenue, representing 26% year-over-year growth.

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This article originally published on Zacks Investment Research (zacks.com).

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