Plexus Financial Performance Under Scrutiny: What Investors Need to Know After 11.4% Share Decline

The stock performance of Plexus (PLXS) has raised eyebrows among market participants over the past month, with shares declining 11.4% following the company’s latest earnings announcement—a notable underperformance relative to the broader S&P 500 index. This divergence between company results and market reaction presents an intriguing question: does this pullback signal continued weakness, or could it represent a compelling entry point for contrarian investors? To answer this, we need to examine the company’s actual operational performance and forward guidance in detail.

Strong Operational Results Mask Market Concerns

When Plexus reported its fourth-quarter fiscal 2025 results, the headline numbers told a story of resilience. The company delivered adjusted EPS of $2.14, surpassing both the year-over-year comparison of $1.85 and the Zacks Consensus Estimate of $1.84. Management had guided for a range of $1.82 to $1.97, and the actual figure landed comfortably within that band.

On the revenue front, Plexus generated $1.058 billion in quarterly revenues, representing a 0.7% year-over-year increase. This result topped the consensus expectation of $1.046 billion and fell within management’s guided range of $1.025 billion to $1.065 billion. Looking at the full fiscal year, Plexus posted $4.03 billion in revenues (up 1.8% annually) paired with adjusted EPS of $7.43—a remarkable 29.9% increase from the prior year, demonstrating significant operational leverage.

Perhaps most promising for future growth, Plexus secured 28 new manufacturing program wins during the quarter, with these contracts expected to generate $274 million in annualized revenue once ramped to full production. Management cited these wins and strong fiscal 2025 execution as foundation for targeting 9% to 12% revenue growth in fiscal 2026.

Geographic and Segment Breakdown Reveals Mixed Signals

The regional performance picture tells a nuanced story. Americas revenues climbed 9.4% to $336 million, showing robust North American demand. However, EMEA (Europe, Middle East, Africa) revenues declined 7%, while Asia-Pacific slipped 2.1%, suggesting uneven global demand conditions.

Looking at end-market vertical performance, the Industrial segment—contributing 44% of total revenues—grew 2% to $461 million. This strength was anchored by demand in broadband, semiconductor equipment, and energy sectors, though management expects only low single-digit growth ahead due to seasonal headwinds and muted near-term bookings.

Healthcare and Life Sciences, representing 40% of revenues, expanded 2.2% to $424 million. Management believes this segment will benefit from ongoing program production ramps and emerging demand opportunities in the current quarter. Our internal estimates suggested this sector should contribute $433.7 million, indicating potential for outperformance.

The Aerospace and Defense segment proved most challenging, declining 6% to $173 million (16% of total revenues). The weakness stemmed from program ramp timing variations rather than structural demand issues. Management guides for flat growth in this sector but expects strength from commercial aerospace programs and unmanned aircraft demand in the first quarter.

Profitability Metrics Show Margin Compression Pressure

Plexus faced headwinds on the margin front during the quarter. Gross profit on a GAAP basis contracted 2.9% year-over-year to $104.8 million, with gross margin compressing 40 basis points to 9.9% from 10.3% in the year-ago period. While selling and administrative expenses declined 4.4%, the operational leverage gains were insufficient to offset gross margin pressure, resulting in adjusted operating margin declining 40 basis points to 5.8%.

This margin compression warrants close monitoring, as it may reflect either temporary manufacturing cost inflation or a shift in product mix toward lower-margin business—both of which could persist if not actively managed.

Balance Sheet and Cash Generation Remain Solid

From a financial fortress perspective, Plexus demonstrated healthy cash generation capabilities. Operating cash flow for the quarter reached $132 million, translating to free cash flow of $97.2 million after capital expenditures. The full fiscal year free cash flow totaled $154 million, providing management with financial flexibility.

The balance sheet reflected modest strengthening, with cash and equivalents increasing to $307 million as of September 27, 2025, up from $237.6 million the prior quarter. Long-term debt and finance lease obligations remained essentially flat at $91.9 million, maintaining a conservative leverage profile.

Management deployed $21.5 million on share repurchases at an average price of $134.07 per share during the quarter, with $65 million repurchased for the full fiscal year. Under the $100 million authorization, $85 million remains available for future buybacks, suggesting management confidence in valuation levels.

Forward-Looking Guidance and Market Expectations

For the first quarter of fiscal 2026, Plexus guided revenues between $1.05 billion and $1.09 billion, with non-GAAP operating margin expected between 5.6% and 6%. Non-GAAP EPS was guided to a range of $1.66 to $1.81. These figures imply manageable near-term growth but also reflect management’s cautious near-term outlook.

Since the earnings report, analyst sentiment has shifted negative, with estimates revisions trending downward. The magnitude and direction of these revisions suggest market participants have adopted a more conservative stance on the company’s near-term trajectory.

Investment Scoring Framework

Under the Zacks analytical framework, Plexus presents a mixed profile. The stock carries a Growth Score of B, indicating respectable but not exceptional growth prospects. However, the Momentum Score of F indicates negative price momentum and deteriorating technical conditions. On the value dimension, Plexus scores a B, positioning it in the top 40% for value investors.

The composite VGM (Value-Growth-Momentum) Score of B suggests the stock offers balanced characteristics across investment methodologies, though the weak momentum component creates near-term headwinds. With a Zacks Rank #3 (Hold), the consensus view calls for in-line market returns over the coming months rather than outperformance.

The Bottom Line

Plexus delivered operationally solid results with earnings and revenue beats, coupled with meaningful program wins that support multi-year growth potential. Yet the recent 11.4% share price decline, coupled with downward estimate revisions and weak momentum metrics, suggests the market has recalibrated expectations materially lower. Whether this repricing represents opportunity or caution depends on your investment time horizon and conviction in management’s ability to execute on fiscal 2026 targets while navigating margin pressures.