Flextronics International - Aggressive Growth

Flextronics (FLEX) just beat earnings expectations last week. Estimates are rising on the company's guidance, pushing shares to a Zacks #1 Rank (Strong Buy)

Company Description

Flextronics is an electronics manufacturing services company for the auto, computing, consumer, industrial and other industries.

Great Quarter

On Jan 20 Flextronics reported its third-quarter results that showed a 19% year over year sales growth, to $7.8 billion. Net income improved 23%, to $232 million.

Earnings per share came in a penny ahead of the Zacks Consensus Estimate, at 23 cents. This was Flextronics' seventh consecutive earnings surprise.

Outlook Improving

After the company said it expected to see revenue between $7.1 and $7.4 billion in the fourth quarter, analysts began raising estimates. The average forecast for fiscal 2011 is up 2 cents, to 81 cents.

Next year's Zacks Consensus Estimate is calling for 97 cents, up 6 cents on unanimous upward revisions from 7 analysts. Given the 66 cents the company earned in fiscal 2009, you have expected growth rates of 23% and 20%, respectively.

Attractive Valuations

Flextronics' shares are trading at just 10 times this year's estimates and with a PEG ratio near 0.9. The P/E ratio is near the peer group average, but the PEG is better than most.

The Chart

FLEX dipped slightly on the earnings news and saw some additional volatility around options expiration, but this leaves the stock at a good place to buy.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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