Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at Benchmark (NYSE:BHE) and its peers.
The sector could see higher demand as the prevalence of advanced electronics increases in industries such as automotive, healthcare, aerospace, and computing. The high-performance components and contract manufacturing expertise required for autonomous vehicles and cloud computing datacenters, for instance, will benefit companies in the space. However, headwinds include geopolitical risks, particularly U.S.-China trade tensions that could disrupt component sourcing and production as the Trump administration takes an increasingly antagonizing stance on foreign relations. Additionally, stringent environmental regulations on e-waste and emissions could force the industry to pivot in potentially costly ways.
The 10 electronic components & manufacturing stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 3% while next quarter’s revenue guidance was in line.
Luckily, electronic components & manufacturing stocks have performed well with share prices up 12.2% on average since the latest earnings results.
Weakest Q1: Benchmark (NYSE:BHE)
Operating as a critical behind-the-scenes partner for complex technology products since 1979, Benchmark Electronics (NYSE:BHE) provides advanced manufacturing, engineering, and technology solutions for original equipment manufacturers across aerospace, medical, industrial, and technology sectors.
Benchmark reported revenues of $631.8 million, down 6.5% year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a softer quarter for the company with revenue guidance for next quarter missing analysts’ expectations.
“I am pleased by Benchmark’s ability to continue to execute to our long-term objectives despite this dynamic market, as evidenced by our sixth consecutive quarter of greater than 10% non-GAAP gross margins while we again generated over $27 million of free cash flow even with a sequential decline of revenue in the first quarter,” said Jeff Benck, Benchmark’s President and CEO.
Benchmark Total Revenue
Unsurprisingly, the stock is down 6.4% since reporting and currently trades at $35.83.
As one of the world's largest printed circuit board manufacturers with facilities spanning North America and Asia, TTM Technologies (NASDAQ:TTMI) manufactures printed circuit boards (PCBs) and radio frequency (RF) components for aerospace, defense, automotive, and telecommunications industries.
TTM Technologies reported revenues of $648.7 million, up 13.8% year on year, outperforming analysts’ expectations by 4.6%. The business had an exceptional quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EPS guidance for next quarter estimates.
TTM Technologies Total Revenue
The market seems happy with the results as the stock is up 38.8% since reporting. It currently trades at $27.83.
With roots dating back to 1896 and a global manufacturing footprint, CTS (NYSE:CTS) designs and manufactures sensors, connectivity components, and actuators for aerospace, defense, industrial, medical, and transportation markets.
CTS reported revenues of $125.8 million, flat year on year, falling short of analysts’ expectations by 2.3%. It was a slower quarter as it posted a significant miss of analysts’ EPS estimates.
CTS delivered the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $39.67.
With roots dating back to 1946 and a focus on components that must perform flawlessly in critical situations, Knowles (NYSE:KN) designs and manufactures specialized electronic components like high-performance capacitors, microphones, and speakers for medical technology, defense, and industrial applications.
Knowles reported revenues of $132.2 million, down 32.7% year on year. This number surpassed analysts’ expectations by 2.5%. It was an exceptional quarter as it also produced revenue guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EPS guidance for next quarter estimates.
Knowles had the slowest revenue growth among its peers. The stock is up 3.5% since reporting and currently trades at $16.21.
Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ:FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.
Flex reported revenues of $6.40 billion, up 3.7% year on year. This result beat analysts’ expectations by 2.6%. Zooming out, it was a mixed quarter as its performance in some other areas of the business was disappointing.
Flex had the weakest full-year guidance update among its peers. The stock is up 13.8% since reporting and currently trades at $41.82.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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