Core Viewpoint - Investors in the Electronics - Miscellaneous Products sector should consider Flex (FLEX) and KLA (KLAC) for potential value opportunities [1] Valuation Metrics - FLEX has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while KLA has a Zacks Rank of 3 (Hold) [3] - FLEX's forward P/E ratio is 20.61, significantly lower than KLAC's forward P/E of 34.65 [5] - FLEX has a PEG ratio of 1.55, compared to KLAC's PEG ratio of 3.34, suggesting FLEX is more reasonably priced relative to its expected growth [5] - FLEX's P/B ratio is 4.69, while KLAC's P/B ratio is much higher at 32.13, indicating FLEX is undervalued compared to its book value [6] - Based on these metrics, FLEX holds a Value grade of B, whereas KLAC has a Value grade of D [6] Earnings Outlook - FLEX is noted for its improving earnings outlook, which enhances its attractiveness as a value investment [7]

Core Viewpoint - Flex and LG Electronics have formed a partnership to develop integrated, modular cooling solutions aimed at addressing the thermal management challenges faced by AI-era data centers [2][4]. Group 1: Partnership Details - The collaboration will leverage Flex's liquid cooling portfolio and power products alongside LG's high-performance air and liquid cooling modules, including CRAC, CRAH, chillers, and coolant distribution units (CDUs) [4][8]. - The partnership aims to provide data center operators with customizable solutions that can scale with demand, enhancing efficiency and deployment speed [5][6]. Group 2: Technological Advancements - Advanced cooling technologies are essential for efficient heat dissipation in high-density data centers, which are increasingly necessary due to the rise of AI workloads [4][8]. - The integrated solutions will ensure reliable temperature control, maximize energy efficiency, and facilitate rapid deployment of high-density AI workloads [5][6]. Group 3: Market Positioning - This partnership is part of Flex's strategy to enhance its competitiveness in the AI data center market by collaborating with leading global companies [6]. - The co-developed solutions will be included in the Flex AI infrastructure platform, which integrates power, cooling, compute, and services into modular designs [6][8].

Financial Performance - The company reported revenues of $13.4 billion for the six-month period ended September 26, 2025, and $25.8 billion for the fiscal year ended March 31, 2025[123]. - Net sales for the three-month period ended September 26, 2025, totaled $6.8 billion, an increase of approximately $0.3 billion, or 4%, from $6.5 billion for the same period in 2024[132]. - Net sales for the Flex Agility Solutions (FAS) segment increased by approximately $0.2 billion, or 4%, driven by a mid-teen percentage increase in the CEC business due to higher demand in data center cloud[132]. - Net sales for the Flex Reliability Solutions (FRS) segment increased by approximately $0.1 billion, or 3%, primarily due to low double-digit growth in the Industrial business[132]. - Gross profit for the three-month period ended September 26, 2025, increased to $0.6 billion, or 9.0% of net sales, compared to $0.5 billion, or 8.1% of net sales, for the same period in 2024[140]. - Net income for the three-month period ended September 26, 2025, was $199 million, a decrease from $214 million for the same period in 2024, while net income for the six-month period increased to $391 million from $353 million year-over-year[160]. Regional Sales Breakdown - Net sales by region for the three-month period ended September 26, 2025, were $3.4 billion (50%) in the Americas, $2.0 billion (30%) in Asia, and $1.4 billion (20%) in Europe[124]. - The U.S. accounted for $1.3 billion (20%) of net sales for the three-month period ended September 26, 2025, compared to $978 million (15%) for the same period in the previous year[124]. Operational Challenges - The company recognized $41 million in asset impairments and inventory write-downs due to a missile strike on its Mukachevo, Ukraine facility[121]. - The company expects to incur additional near-term inefficiencies as restoration activities progress in Mukachevo, Ukraine[121]. - The ongoing geopolitical conflicts, including the Russia-Ukraine conflict, may impact the company's business operations and financial performance[120]. Cost and Expenses - Tariff costs impacted revenues and costs of goods by approximately 1% during the three and six-month periods ended September 26, 2025[122]. - Selling, general and administrative expenses (SG&A) were $0.3 billion, or 3.8% of net sales, during the three-month period ended September 26, 2025, an increase of $44 million compared to the same period in 2024[148]. - Restructuring charges recognized during the three-month period ended September 26, 2025, totaled approximately $10 million, primarily related to employee severance[147]. - Interest expense decreased to $52 million for the three-month period ended September 26, 2025, from $53 million during the same period in 2024[150]. Cash Flow and Capital Structure - Cash provided by operating activities was $0.9 billion for the six-month period ended September 26, 2025, driven by $0.4 billion of net income and $0.3 billion of non-cash charges[162]. - Free cash flow for the six-month periods ended September 26, 2025, and September 27, 2024, was $0.573 billion and $0.451 billion, respectively[165]. - As of September 26, 2025, cash and cash equivalents totaled approximately $2.2 billion, with bank borrowings of approximately $3.7 billion and a $2.75 billion revolving credit facility with no borrowings outstanding[161]. - Net working capital increased by approximately $0.5 billion to $3.5 billion as of September 26, 2025, from $3.0 billion as of March 31, 2025[163]. - Net cash used in investing activities was $0.3 billion during the six-month period ended September 26, 2025, primarily for capital expenditures and a business acquisition[164]. Tax and Shareholder Returns - The consolidated effective tax rate was 24% for the three-month period ended September 26, 2025, compared to 19% for the same period in 2024[157]. - The company has authorized share repurchases of up to $1.7 billion, with $0.5 billion spent on repurchases at an average price of $42.35 per share during the six-month period[171]. - The company issued a warrant to Amazon.com to purchase up to 3,859,851 ordinary shares at an exercise price of $51.29 per share, expiring on August 15, 2030[172]. - The company expects to remain in compliance with covenants under all credit facilities and indentures for the upcoming 12 months[161]. Competitive Position - The company operates approximately 100 facilities in about 30 countries, serving both multinational and regional customers[123]. - The company has a competitive advantage due to its extensive open innovation platform solutions and significant scale in low-cost geographic areas[123].

Core Viewpoint - Flex Ltd (FLEX) reported Q3 '26 results that were perceived as slightly disappointing, with the only positive aspect being the significant investment from major tech companies into the market [1] Financial Performance - The Q3 '26 results of Flex Ltd were described as lackluster, indicating potential challenges in performance [1] Investment Sentiment - The ongoing investment from big tech companies is seen as a crucial factor that may support the market and provide a positive outlook for long-term investors [1]

Core Insights - Flex Ltd (FLEX) reported Q3 '26 results that were perceived as slightly disappointing, with the only positive aspect being significant investments from major tech companies [1] Financial Performance - The Q3 '26 results of Flex Ltd were described as lackluster, indicating potential challenges in performance [1] Investment Sentiment - The article reflects a long-term investment perspective, emphasizing a preference for a diversified portfolio that includes growth, value, and dividend-paying stocks, with a particular focus on value [1]

Core Insights - Flex Ltd. reported second-quarter fiscal 2026 adjusted earnings per share (EPS) of 79 cents, exceeding the Zacks Consensus Estimate by 5.3% and up from 64 cents in the prior-year quarter [1][9] - Revenues increased 4% year over year to $6.8 billion, beating the consensus mark by 2%, driven by strong data center growth in cloud and power markets [2][9] Financial Performance - Flex's revenue guidance for fiscal 2026 has been revised to $26.7–$27.3 billion, an increase of $500 million from the prior midpoint, with an expected adjusted EPS of $3.09 to $3.17, raising the midpoint by 17 cents per share [3][9] - Non-GAAP gross profit rose to $632 million from $554 million year-over-year, with a non-GAAP gross margin expansion of 80 basis points to 9.3% [10] - Non-GAAP operating income increased to $409 million from $358 million year-over-year, with an operating margin expansion of 55 basis points to 6% [10] Segment Performance - The Flex Reliability Solutions Group saw revenues grow 3% to $3 billion, accounting for 45% of net sales, driven by strong power growth and steady gains in health solutions [7] - The Flex Agility Solutions Group's revenues increased 4% to $3.8 billion, representing 55% of net sales, supported by strong cloud demand [8] Future Guidance - For the third quarter of fiscal 2026, Flex expects revenues between $6.65 billion and $6.95 billion, with adjusted earnings projected at 74-80 cents per share [13] - Reliability Solutions revenue is anticipated to grow mid- to high-single digits, while Agility Solutions revenue is expected to range from slightly down to up low single digits [14] Stock Performance - Following the earnings announcement, Flex's shares rose 2.86%, closing at $66.10, with a year-over-year stock surge of 85.7% compared to the industry growth of 28.8% [5]

Core Insights - Flex published its 2025 sustainability report, detailing its performance against 2030 sustainability goals for the calendar year 2024 [1][2] - The company's sustainability strategy emphasizes reducing environmental impact, uplifting communities, and fostering a safe work environment [1][2] Sustainability Performance - Flex achieved a 43% decrease in absolute scope one and two emissions from the 2019 base year [6] - 32% of electricity used was powered by renewable energy [6] - 47% of sites within scope are verified as zero waste [6] - There was a 10% decrease in total case incident rate year over year [6] - 58% of preferred suppliers had emission reduction targets, and 100% of specified customers had science-based targets [6][7] Recognition and Awards - Flex received an A- CDP Score for Climate and was listed on Times and Statista's World's Best Companies List for the second consecutive year [3] - The company was honored as a 2025 World's Most Ethical Company® by Ethisphere for the third straight year [3] - Awards were received for advancing sustainability with value chain partners, including a Supplier Pledge Award from HP and an Excellence in ESG award from Cisco [3] Company Overview - Flex operates as a manufacturing partner across 30 countries, providing advanced manufacturing and supply chain solutions [4] - The company is focused on accelerating data center deployment through innovative power and cooling technology [4]

Industry Overview - The global cannabis market is experiencing growth, with increasing demand for cannabis products, particularly in the US, which has the largest cannabis market in the world [3] - Despite a downtrend in publicly traded cannabis companies, the sector is still progressing, leading to optimism for long-term gains [2] Company Highlights - **Planet 13 Holdings Inc.** has expanded its retail operations by opening a new dispensary in Pensacola, Florida, aiming to serve local communities with high-quality cannabis products [7][8] - **Ascend Wellness Holdings, Inc.** is set to report its Q3 2025 earnings, with a conference call scheduled for November 10, 2025, indicating ongoing operational transparency and engagement with investors [10] - **FLUENT Corp.** has unified its New York retail network by rebranding its Manhattan and White Plains dispensaries, marking a strategic move to enhance its presence in the state [11]

Core Insights - Flex reported quarterly earnings of $0.79 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, and up from $0.64 per share a year ago, representing an earnings surprise of +5.33% [1] - The company achieved revenues of $6.8 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.13% and increasing from $6.55 billion year-over-year [2] - Flex has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was +14.29%, with actual earnings of $0.72 per share compared to an expected $0.63 [1] - The current consensus EPS estimate for the upcoming quarter is $0.75, with projected revenues of $6.65 billion, and for the current fiscal year, the EPS estimate is $2.99 on revenues of $26.52 billion [7] Stock Performance - Flex shares have increased approximately 67.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 17.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Electronics - Miscellaneous Products industry, to which Flex belongs, is currently in the top 20% of over 250 Zacks industries, suggesting a favorable outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenue for the second quarter was $6.8 billion, representing a 4% year-over-year growth [5][12] - Operating margin was 6%, maintaining this level for four consecutive quarters, with adjusted EPS of $0.79, up 23% year-over-year [6][12] - Gross profit totaled $632 million, with a gross margin improvement to 9.3%, up 80 basis points [12] Business Line Data and Key Metrics Changes - In the Reliability Solutions segment, revenue was $3 billion, up 3% year-over-year, driven by strong growth in power and moderate growth in health solutions [12][13] - Agility Solutions revenue totaled $3.8 billion, an increase of 4% year-over-year, primarily due to robust cloud demand [13] - Operating income for Reliability Solutions improved to $197 million, with a segment margin expansion to 6.5% [13] Market Data and Key Metrics Changes - The data center business is expected to grow at least 35% this year, reflecting strong demand in cloud and power sectors [7][8] - Medical device demand remains steady, with expectations for improvement in medical equipment later this year [10] - The automotive market is stabilizing, with new compute deals validating investments in software-defined vehicles [10] Company Strategy and Development Direction - The company is strategically shifting its portfolio towards higher-margin, technology-driven businesses, particularly in AI and data center infrastructure [8][9] - Flex unveiled a new AI infrastructure platform aimed at enhancing data center deployment efficiency [9] - The company is committed to rebuilding operations in Ukraine following facility damage, emphasizing resilience and support for employees [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate a dynamic tariff landscape and maintain strong top-line momentum [15] - The company raised its full-year revenue guidance to between $26.7 billion and $27.3 billion, reflecting strong performance despite challenges [15][16] - Management highlighted the importance of partnerships with leading technology companies to drive future growth [46][47] Other Important Information - Free cash flow for the quarter increased to $305 million, with net CapEx totaling $148 million [13][14] - The company repurchased $297 million of stock, approximately 5.6 million shares [14] Q&A Session Summary Question: Why was there no upside to data center revenues despite strong performance? - Management clarified that data center growth is not updated quarterly, but they expect at least 35% growth for the year, which is strong compared to industry standards [22] Question: How does the mix of custom silicon versus merchant silicon impact the cloud business? - Management indicated that they benefit significantly from hyperscale growth and will provide updated guidance in May regarding the mix of custom versus merchant silicon [26][27] Question: What is driving margin improvements in the second half? - Management noted that growth in products and services businesses, which have higher margins, is expected to drive margin improvements [33][34] Question: How does the company view the automotive market's growth potential? - Management stated that they are cautiously optimistic about stabilizing growth in the automotive sector, with a focus on long-term commitments [55] Question: What is the outlook for data center capacity and potential supply constraints? - Management expressed confidence in capacity and capability across regions, with plans for significant CapEx investments to support growth [70][71] Question: How is AI and automation being utilized in operations? - Management highlighted ongoing efforts to deploy AI and robotics to enhance efficiency and productivity in manufacturing and logistics [76][77]