Plexus (PLXS): Assessing Valuation After Q3 Earnings Beat and $250M in New Program Wins

Plexus (PLXS) just delivered an upbeat third-quarter report, catching the eye of investors with adjusted earnings per share outpacing expectations. The real story comes from broad revenue growth and a wave of new business. The company secured 41 manufacturing programs, which could potentially bring in an extra $250 million per year once they are fully operational. Additionally, Plexus management expressed optimism for the next quarter, projecting not only higher revenues but also improved operating margins and strong earnings per share.

This momentum marks a shift for Plexus, whose stock has edged up 8% over the past year after a rocky start to 2025. After lagging for much of the year, shares have rallied by approximately 11% in the past month as investors responded to the earnings beat and positive guidance. While Plexus has already posted a 45% total return over the past three years, recent movements have been sharper and appear to indicate a turnaround from earlier risk concerns and subdued sentiment.

With the stock’s latest gains and future growth signals coming from management, some investors are weighing whether Plexus remains attractive at current levels or if the recent price increase indicates the market has already priced in these developments.

Most Popular Narrative: 11.2% Undervalued

According to the community narrative, Plexus is currently considered undervalued compared to its fair value estimate, with a sizable gap between its recent share price and the consensus price target. This perspective is based on the company's ongoing digital transformation, sector expansion, and anticipated improvements in margins and earnings.

The company's increasing success in winning programs in high-margin, complex sectors such as healthcare/life sciences, aerospace, and defense (including strong defense pipeline in Europe and record sector wins) is shifting the revenue mix toward segments with higher pricing power and more stable, long-term contracts. This should positively impact both revenue consistency and net margin expansion.

Want to know what’s fueling this call for upside? The narrative points to bold moves into higher-value contracts and sectors that are typically out of reach for mid-sized manufacturers. Crucial financial assumptions about future sales, profitability, and valuation multiples form the basis of the analysts' target. For more details on the specific numbers and growth levers behind this potential undervaluation, consider exploring further.

Result: Fair Value of $154.6 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Plexus still faces challenges from sector cyclicality and customer concentration. These factors could disrupt revenue growth if key programs stumble or demand slows.

Find out about the key risks to this Plexus narrative.

Another View: Discounted Cash Flow Estimate

Looking at Plexus through our DCF model presents a very different story and suggests the shares might be significantly overvalued by traditional cash flow forecasts. Does this conservative estimate provide a more accurate reflection of the risks ahead?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Plexus for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Plexus Narrative

If you have a different perspective or want to put your own analysis to work, you can easily build your own view of the numbers in just a few minutes. do it your way.

A great starting point for your Plexus research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Smart Investment Opportunities?

Sharpen your investing edge by tapping into the freshest market ideas that others might overlook. The Simply Wall Street Screener helps you uncover stocks tailored to your personal strategy. Take action now on these standout themes before others catch on and get ahead of the curve:

• Secure your portfolio with steady payouts and reliable growth by tracking dividend stocks boasting yields over 3% through dividend stocks with yields > 3%.
• Capitalize on the fast evolution of healthcare by pinpointing AI-fueled companies transforming the medical sector via healthcare AI stocks.
• Stay at the forefront of investing by targeting AI penny stocks capturing tech breakthroughs and lightning-fast advances with AI penny stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com