Flex Stock Surges 55% in the Past Year: Will the Uptrend Continue?

Flex Ltd. (FLEX) is benefiting from strong results across its cloud and power portfolios. Also, the company is gaining from growing data center exposure, strong global manufacturing scale and robust cash flow.

Notably, the stock has surged 54.7% in the past year, outperforming the Zacks Electronics - Miscellaneous Products industry, the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 31.5%, 30.7% and 23.4%, respectively. FLEX’s shares have risen 19.6% in the past six months.

Let us evaluate the pros and cons of FLEX and decide the best course of action for your portfolio.

Tailwinds

Flex has evolved into an end-to-end solutions provider, engaged in design, procurement, manufacturing and supply services for a broad range of products, from electronics to athletic shoes. In addition, the company offers value-added services in design, metal, components, supply chain management integration and aftermarket services, like the circular economy.

The company is aggressively moving into the high-growth data center market. Flex’s data center business has continued to deliver exceptional performance across both cloud and power segments in the second quarter of fiscal 2026. Recently, Flex announced a partnership with LG Electronics to co-develop integrated modular cooling systems designed to tackle the growing thermal challenges of AI-driven data centers. Flex also announced a collaboration with NVIDIA to build modular, high-performance, energy-efficient AI data centers at scale.

Leveraging Flex’s advanced manufacturing and integration capabilities, the partnership aims to address power, heat and scalability challenges in modern data centers. Flex remains on track to generate approximately $6.5 billion in revenue from data centers, implying year-over-year growth of at least 35% and accounting for 25% of its total revenues.

Apart from these, the company’s global scale and capabilities support its regionalization strategies by bringing manufacturing closer to end markets, enhancing agility, reducing risks and meeting evolving trade requirements. The company has embedded AI-enabled systems, advanced automation and localized supply chains across its facilities, enabling speed, flexibility and resilience. These capabilities are critical not only for the data center segment but also for other key markets like automotive, healthcare and industrials, which together contribute around 75% of Flex’s total revenues.

These markets involve highly regulated, complex products that demand global design and delivery expertise. Flex’s regional revenue mix reflects its ability to adapt to shifting customer demands. It remains bullish on the potential of its advanced manufacturing capabilities. The company expects continued productivity improvements through the expanded deployment of AI and intelligent systems across its global factories.

Flex Ltd. Price and Consensus

Flex Ltd. price-consensus-chart | Flex Ltd. Quote

Flex has revised its fiscal 2026 revenue guidance to $26.7–$27.3 billion, up $500 million from the prior midpoint. It expects an adjusted operating margin of 6.2% to 6.3%, reflecting consistent performance above 6%. The company projects adjusted EPS of $3.09 to $3.17, raising the midpoint by 17 cents per share. Flex is targeting to achieve the fiscal 2027 goal of a positive 6% adjusted operating margin a year ahead of schedule.

Flex expects to generate robust free cash flow and uphold its target of more than 80% free cash flow conversion. Strong cash flow generation positions Flex to maximize shareholder value via buybacks and reduce debt.

Possible Headwinds

Flex faces multiple headwinds that could constrain its growth outlook. A highly leveraged balance sheet, ongoing macroeconomic uncertainty and shifting trade policies continue to weigh on performance. Within the Reliability Solutions segment, management expects weak demand trends to persist in the automotive business. Additionally, tariffs linked to raw material sourcing could pressure margins and disrupt cash flows, even with pass-through mechanisms in place. The company also operates in a highly competitive EMS landscape, where intensifying competition could limit contract wins and adversely affect revenue growth.

FLEX’s Undervaluation: A Buying Opportunity?

The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 20.08, below the industry’s average of 27.1.

How Should Investors Play FLEX Stock?

With a Zacks Rank #3 (Hold), FLEX appears to be treading in the middle of the road. Strength in cloud and power portfolios, along with a high-growth data center market and strong cash flow, bode well for Flex.

However, tariff pressures, macro uncertainty, elevated debt and intense competition remain concerns for Flex. New investors may consider waiting for a more attractive entry point, while existing investors should continue to hold the stock at current levels.

Stocks to Consider

Some better-ranked stocks from the broader technology space are Dragonfly Energy Holdings Corp. (DFLI), KLA Corporation (KLAC) and MKS Inc. (MKSI). DFLI, KLAC and MKSI carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dragonfly’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average surprise being 37.84%. In the last reported quarter, DFLI delivered an earnings surprise of 71.83%. Its shares have surged 159.7% in the past six months.

KLAC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 5.86%. In the last reported quarter, KLA Corporation delivered an earnings surprise of 3.04%. Its shares have surged 105.4% in the past year.

MKSI earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 12.39%. In the last reported quarter, MKSI delivered an earnings surprise of 7.22%. Its shares have jumped 68.7% in the past year.

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

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