Seeking Alpha
Profile| Send Message|
( followers)

Flextronics (NASDAQ:FLEX) is a leading Electronics Manufacturing Services provider focused on delivering complete design, engineering and manufacturing services to automotive, computing, consumer, industrial, infrastructure, medical and mobile OEMs [original equipment manufacturers]. In FY 2011, Flextronics' sales in Asia, the Americas and Europe, respectively, represented 52%, 29% and 19% of total net sales, based on the location of the manufacturing site. Here is its most recent 10K.

For FY 2011 ending in March 31, 2011, adjusted EPS came in at $0.87, meeting the consensus. This was 64.15% higher than in FY 2010. However, revenues missed the analyst consensus of $29.14 billion by drawing in $28.680B (+18.94%). For Q1 2011, the company gave guidance of adjusted EPS to be in the range of $0.20 to $0.23 with revenues of $7.1 B to $7.6 B. In comparison, Q1 2010 produced adjusted EPS of $0.19 alongside revenues of $6.566 B. For 2011, the company reported a record return on invested capital of 30.5%. The company also has a manageable debt to equity ratio of 0.96.

The Street has modest growth expectations for Flextronics. In FY 2012, it expects adjusted EPS to be $0.98 (+12.64%) with revenues of $31.5 B (+9.83%). Going forward, for FY 2013, analysts forecast adjusted EPS to grow by 15.30% to $1.13, and revenues are expected to increase by 6.98% to $33.7 B.

Flextronics trades with a P/E of only 7.9 using adjusted EPS, and 9.1 using GAAP EPS. Moreover, it merely trades at 0.2 times sales. FLEX is grossly undervalued. It should be trading at least at 12 times earnings. This would imply a price target of $11.75 after FY 2012 has run its course. The Reuters Research Average price target is $8.67. Flextronics trades below $7 per share, and is a buy at current levels.

Micron Technology (NASDAQ:MU) is one of the world’s leading semiconductor companies. MU has been static over the trailing 12 months, and it trades with a P/E of 6.2. However, this stock popped after Q2 results were released on March 23. Analysts pointed to enhanced demand from Micron’s customer base. The next earnings release is on June 22, with a consensus non-GAAP EPS of $0.18 and revenues of $2.4 B. In FY 2010, the company produced $2.48 B in free cash flows, and over the first 6 months in FY 2011, it churned out $1.857 B in free cash flows. Micron also has a low debt to equity ratio of 0.17.

S&P rates Micron with 4 stars as a buy. It indicated that stronger personal computer and electronic devices demand will aid earnings and margins. The analysts above also have shown concurring views on this. S&P also believes that “Micron has the right technology to compete favorably in the memory market and to reduce cost per bit at a fast rate.” The company also recently expanded its China manufacturing operations to accommodate more Asian clients.

The consensus for FY 2011 is to produce $9.4 B in revenues (+10.88%) and for FY 2012 to show revenues of $10.7 B (+13.82%). This is a fair amount of growth. The Reuters Research Average price target is $14.34, and Micron currently trades below $9.25 per share. Also, keep in mind the low P/E. This is a buy at current levels.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.