Flex's Q3 Earnings & Revenues Surpass Estimates, Increase Y/Y

Flex Ltd. FLEX reported third-quarter fiscal 2026 adjusted earnings per share (EPS) of 87 cents, which surpassed the Zacks Consensus Estimate by 10.1%. The bottom line compared favorably with 77 cents posted in the prior-year quarter.

Revenues increased 7.7% year over year to $7.1 billion. Also, it beat the consensus mark by 3.6%. The uptick was driven by robust AI demand.

Management highlighted that the company’s strong momentum continued into the third quarter, with results surpassing guidance across all key metrics. This outperformance underscores the resilience and breadth of its diversified business model across multiple end markets, including Data Center. Looking ahead, the company remains confident in its ability to act as a strategic partner to its customers, helping them navigate an increasingly complex and dynamic operating environment.

Flex Ltd. Price, Consensus and EPS Surprise

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

Management highlighted that the company’s disciplined approach and continued focus on portfolio management are clearly reflected in its full-year performance. For the fiscal year, the company expects revenues of $27.2-$27.5 billion, representing a $350 million increase at the midpoint versus its prior outlook of $26.7–$27.3 billion. It also forecast an adjusted operating margin of approximately 6.3% and adjusted EPS in the range of $3.21-$3.27, reflecting a $0.11 increase at the midpoint. Flex continues to anticipate strong cash generation and reaffirms its guidance of more than 80% free cash flow conversion for the year.

For Reliability Solutions, the company expect revenues to increase at a mid-single-digit rate, driven by strong data center power demand and solid growth across Core Industrial and Health Solutions. For Agility Solutions, revenues are also expected to grow at a mid-single-digit pace, supported by continued strength in cloud, partially offset by softer demand in consumer devices and lifestyle markets.

Despite delivering robust third-quarter fiscal 2026 results and issuing an upbeat outlook for the full-year fiscal 2026, investor sentiment turned negative. Flex’s shares declined about 11% in trading, closing at $58.83 on Feb. 4, 2026. The pullback likely reflects concerns over macroeconomic uncertainty, ongoing tariff pressures, elevated debt levels and intense competition. Moreover, Flex’s growing dependence on AI-driven demand heightens its sensitivity to fluctuations in AI investment capex cycles.

In the past year, the stock has surged 33% compared with the Zacks Electronics - Miscellaneous Products industry’s growth of 28.5%.

Segment Details

The Flex Reliability Solutions Group encompasses Health Solutions, Automotive and Industrial businesses. Revenues grew 10% to $3.2 billion, accounting for 45% of net sales. Power remains a key growth driver, alongside continued momentum in Core Industrial and Health Solutions.

The Flex Agility Solutions Group comprises Communications & Enterprise Compute, or CEC, and Lifestyle and Consumer Devices businesses. Revenues were up 6% to $3.8 billion, accounting for the remaining 55% of net sales. This was driven by continued strong growth in data center–related end markets, which was partially offset by weaker demand in consumer-oriented markets.

FLEX’s Operating Details

Non-GAAP gross profit came in at $679 million, up from $594 million reported in the year-ago quarter. Non-GAAP gross margin expanded 500 basis points (bps) to 9.8% in the reported quarter. Margin expansion was driven by a favorable strategic product mix and disciplined operating cost management.

Non-GAAP operating income came in at $460 million, up from $399 million reported a year ago. Non-GAAP operating margin expanded 70 bps to 6.2%.
The adjusted operating margins of the Flex Reliability Solutions Group were 7.2%, up 50 bps from the prior-year level. The adjusted operating margins of the Flex Agility Solutions Group remained unchanged to 6.3%.

Selling, general & administrative expenses totaled $270 million, up 12% year over year.

Balance Sheet & Cash Flow

As of Dec. 31, 2025, cash & cash equivalents and long-term debt (net of current portion) were $3.1 billion and $3.8 billion, respectively, compared with $2.25 billion and $3 billion as of Sept. 26.

The company generated a third-quarter fiscal 2026 cash flow from operating activities of $420 million and an adjusted free cash flow of $275 million.
In the quarter, the company repurchased $200 million worth of stock.

Fiscal Q4 Guidance

For the fourth quarter of fiscal 2026, Flex expects revenues to be between $6.75 billion and $7.05 billion.

Management expects adjusted earnings of 83-89 cents per share. Adjusted operating income is projected to be between $445 million and $475 million.

Flex expects Reliability Solutions revenues to increase low double-digit to mid-teens range, supported by strong power demand and accelerating growth in Core Industrial and Health Solutions.

Agility Solutions revenues are expected to rise in the low to mid-single-digit range, with growth in cloud and networking partially offset by softer demand in consumer devices and lifestyle markets.

FLEX’s Zacks Rank

Flex currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Firms

Lam Research LRCX reported second-quarter fiscal 2026 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate.
LRCX reported second-quarter non-GAAP earnings of $1.27 per share, which beat the Zacks Consensus Estimate by 8.5%. The bottom line increased 39.6% on a year-over-year basis.

In the second quarter of fiscal 2026, LRCX reported revenues of $5.34 billion, which surpassed the consensus mark by 2.1%. The top line rose 22% from the year-ago quarter’s $4.38 billion.

Teradyne TER reported fourth-quarter 2025 non-GAAP earnings of $1.8 per share, which beat the Zacks Consensus Estimate by 32.22% and surged 89.5% year over year.

Revenues of TER came at $1.08 billion, beating the Zacks Consensus Estimate by 11.82% and increased 43.7% year over year.

KLA Corporation KLAC reported second-quarter fiscal 2026 non-GAAP earnings of $8.85 per share, beating the Zacks Consensus Estimate by 0.36%. The figure increased 7.9% year over year.

KLAC reported a revenue increase of 7.2% year over year to $3.3 billion, surpassing the Zacks Consensus Estimate by 1.02%.

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