BENCHMARK ELECTRONICS, INC. (BHE): what the price assumes
In the published model solve dated 2026-Q2, anchored at $72.64, BENCHMARK ELECTRONICS, INC. (BHE) is priced for today's economics sustained for ~6.1 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.
Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/BHE
Headline
| Field | Value |
|---|---|
| Ticker | BHE |
| Company | BENCHMARK ELECTRONICS, INC. |
| Sector / Industry | Technology |
| Current price | $72.64/sh |
| Composition | Semi-Cap 28% / Industrial 22% / Medical 18% / A&D 19% / AC&C 13% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 4.4% |
| Operating margin today | 3.4% |
| Margin expansion (value-band) | +1.0pp |
| Must persist for | 6.1y |
| Multiple paid | 27x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 9.7% cost of capital; growth searched up to the 25% self-funding ceiling.
How unusual the bet is: n/a
| Reference | Value |
|---|---|
| vs own history | +0.33σ |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 6.74x | 5 | expensive |
| Earnings | 2.25x | 5 | expensive |
| Relative | 1.29x | 5 | expensive |
| Growth | 0.87x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $96.47 | 0.75x | yes | FCF base $0.1B, growth 8% (input: historical growth), terminal g 4.0%, WACC 8.4%, 6yr projection |
| DCF Exit Multiple | Growth | $83.56 | 0.87x | yes | Exit EV/EBITDA: 16.0x / 18.0x / 20.0x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $56.43 | 1.29x | yes | P/E 30.13x (blended: static sector reference 22x + trailing (TTM) 49x), scenarios: 25.0x / 30.1x / 35.2x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $15.99 | 4.54x | yes | BV/sh $31.08, ROE (TTM) 4.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $10.77 | 6.74x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $61.73 | 1.18x | yes | Rev $2.9B, growth 8% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.9x / 1.1x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $17.52 | 4.15x | yes | EPS $1.46, growth 2% (input: historical EPS growth), PEG=24.55 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $23.44 | 3.10x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.10B × (1−31%) / WACC 8.4% → EPV (no growth) |
| Residual Income | Asset | $9.91 | 7.33x | yes | BV $31.08 + 5yr PV of (ROE (TTM) 4.8% − Kₑ 9.3%) × BV; BV grows 3.1%/yr |
| Graham Number | Asset | $31.95 | 2.27x | yes | √(22.5 × EPS $1.46 × BVPS $31.08) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $64.64 | 1.12x | yes | EBITDA $0.14B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $37.98 | 1.91x | yes | FCF $124.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $32.24 | 2.25x | yes | SBC-adj FCF $0.10B (FCF $0.12B − SBC $0.02B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $47.11 | 1.54x | yes | EPS $1.46 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $7.08 | 10.26x | yes | BV $31.08 × (ROIC 1.9% / WACC 8.4%) |
| P/Sales Sector | Relative | $404.19 | 0.18x | yes | Revenue $2.90B × sector P/S 5.0x |
| PEG Fair Value | Relative | $54.75 | 1.33x | yes | EPS $1.46 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $15.78 | 4.60x | yes | EPS $1.46 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $133.9m |
| Net debt / NOPAT (after-tax) | -2.02x (net cash) |
| Net debt / operating income (pre-tax) | -1.40x (net cash) |
| Interest coverage | 6.0x |
| Share count CAGR (dilution) | 0.7% |
| Burning cash | no |
Bullet Takeaways
- The balance sheet is the quiet strength: the 10-Q reports "Cash, cash equivalents and restricted cash totaled $325.2 million as of March 31, 2026" against an undrawn cushion in a $550.0 million revolving facility running to 2030, and the board raised the quarterly dividend to $0.17 a share in late 2025.
- The price requires a margin this company has never sustained: roughly 5.3% at the operating line against about 3% today, which would put Benchmark ahead of every competitor in its own peer set on profitability.
- Second-quarter results land after the close on Wednesday, July 29, 2026, with the mix between recovering advanced-computing volume and shrinking aerospace programs the thing to read.
Bull Case
Look at what the company keeps in the bank before looking at what it earns. The 10-Q states that "Cash, cash equivalents and restricted cash totaled $325.2 million as of March 31, 2026", sitting alongside a credit agreement that provides a term loan and "a $550.0 million revolving credit facility, both with a maturity date of June 27, 2030". Interest is covered a little under four times over by trailing operating profit, and the share count has barely moved, drifting up about 0.6% a year across four years. For a contract manufacturer, whose entire business model is absorbing working-capital swings on behalf of customers who do not want to, that combination is the licence to operate. It is also the reason a board felt comfortable raising the quarterly dividend from "$ 0.165 to $ 0.17 per common share" in late 2025, a small gesture that is only made by management that expects the cash to keep arriving.
Behind the cash is a deliberate choice about which work to take. The company says it declines high-volume commodity assembly and instead targets "low-to-medium-volume, high-complexity manufacturing programs, primarily within the A&D, semi-cap, medical, and industrial markets, which are often highly regulated and increasingly outsourced by OEMs". That is the difference between competing on price per board and competing on qualification. Once a medical device or a defence subsystem has been through certification at a particular plant, moving it is expensive and slow, and the customer stops shopping.
The mix has been shifting toward exactly those markets. In 2025 medical sales rose "7% to $483.9 million from $450.7 million in 2024" and semiconductor capital equipment work rose "2% to $741.2 million from $723.2 million in 2024", with industrial roughly steady at $574.7 million. Then the first quarter of 2026 turned higher: total sales rose "7% from the first quarter of 2025", and in the Americas "Sales for the three months ended March 31, 2026 increased 10% to $311.3 million from $284.3 million" on advanced computing and medical demand.
The profitability is following the volume, which is the part that matters. Income before taxes ran 2.7% of sales in the March 2026 quarter against 1.3% a year earlier, and net income 1.9% against 0.6%. Those are small percentages in absolute terms, but on a business this size a doubling of the pre-tax margin is the difference between a marginal operation and one that funds its own growth. The bull case is not that Benchmark becomes a high-margin business. It is that a company that books nearly nine-tenths of its revenue as work transferred over the life of a program rather than at shipment, on contracts with multi-year qualification cycles, is worth more when utilisation improves than the trailing figures suggest.
The honest limits are two. Most of the money is offshore: of the March 2026 cash balance, "$303.8 million held outside the" United States, which constrains how quickly it can be redeployed at home. And the customer base is narrow, which the 10-K states plainly: "A substantial percentage of our sales is attributable to a small number of" customers. Neither is disqualifying. Both mean the balance sheet is less flexible than the headline cash figure implies.
Bear Case
Two assumptions are doing all the work in this price, and the fragile one is not the growth rate. To support $81.20, the business has to lift operating margin to somewhere near 5.3% from about 3% today, and then hold growth at the fastest pace it can fund from its own cash flow for the better part of a decade. Take those separately, because they fail separately.
The margin assumption asks Benchmark to become the most profitable company in its own competitive set. PLXS currently earns a 5.17% operating margin on $4.31B of revenue growing 8.6%. FLEX runs 4.90% on $27.91B. JBL converts 4.28% of $33.59B. SANM manages 3.57% on $11.34B. Benchmark's own 10-K names most of them as competitors. The margin the price requires sits above all of them, and it has to be achieved by the smallest company in the group, which has the least purchasing leverage over component suppliers and the least ability to absorb a plant running below capacity.
The duration assumption is the one history argues with. Of comparable fast-growers, roughly 18% sustained a pace like this for about 8.7 years. And the recent record does not obviously support starting the clock now: full-year 2025 revenue was flat, with the growth in aerospace, medical and semiconductor equipment offset by a 27% decline in advanced computing and communications work. A business that grew zero percent last year is being asked to compound near its maximum self-funded rate through the mid-2030s.
Look at where the fragility actually sits and it is in the programs themselves. Aerospace and defence sales in the March 2026 quarter "decreased 2% to $119.8 million from $121.9 million" a year earlier, and the filing attributes that to "certain programs going end-of-life". That is the structural problem with high-complexity contract manufacturing: the qualification barrier that protects a program also means the program eventually ends, and replacing it requires winning a new design from scratch. Meanwhile the semiconductor equipment exposure that carries the largest share of revenue is the most cyclical thing in the portfolio. Two firms serving the same equipment supply chain, UCTT and ICHR, currently run negative operating margins at minus 5.26% and minus 3.75% respectively, which is what that end market looks like when it is not cooperating.
The fair concession is that the March quarter genuinely improved and that the balance sheet gives management time to work. The counter is that time is what the price has already spent. Every valuation approach here, on assets, on earnings power, on peer multiples, and on projected cash flow, lands below the current price. When nothing reaches the number, the shares are not expensive relative to one lens; they are being carried by an expectation none of the standard frames encode.
Valuation
Nothing in the standard toolkit reaches $81.20. The methods that value the assets land furthest away, with the price sitting at roughly 13 times where the asset-value family centres. The earnings-power methods put the price at about 3.7 times their central estimate. Peer-multiple approaches leave the price roughly 64% above where they land, and even the forward-growth methods, which are the most generous by construction, leave it about 37% above. The asset gap has a simple source: book value is $30.23 a share and the trailing return earned on it is near 3.1%. That unanimity is the finding. There is no lens under which today's price is a value read; the disagreement is only about how far past the evidence it sits.
What has to be true for it to make sense is specific and can be stated in two numbers. At the enterprise level the price works out to about 37 times trailing operating profit. Inverted, that implies operating profit growing at the ceiling the company can fund from its own cash flow, held for about 8.7 years, or alternatively an operating margin reaching about 5.3% against the roughly 3% earned today. Both are single solves under fixed assumptions, so keep them approximate. What is not approximate is the historical base rate behind the first one: only about 18% of comparable fast-growers held that pace for that long.
The peer set gives the margin requirement a concrete yardstick. PLXS earns 5.17% at the operating line, FLEX 4.90%, JBL 4.28%, SANM 3.57%. Benchmark, on 2.79 billion dollars of revenue, earns about 3%, and the price asks it to end up above all of them. That is not impossible. Contract manufacturers do improve mix, and Benchmark has deliberately positioned toward regulated, low-volume work where pricing is less brutal. It is simply a demanding thing to underwrite, and it would represent a structural change in where this company sits in its industry rather than a cyclical recovery within it.
Downside, at least, is not a solvency question. Cash, cash equivalents and restricted cash stood at "$325.2 million as of March 31, 2026" against modest borrowings under a facility that does not mature until 2030, interest is covered roughly four times over by trailing operating profit, and the company is not consuming cash. The share count has been near flat. What the balance sheet does not do is bridge the gap between what the business earns and what the price assumes it will earn. That gap has to be closed by margin, in a low-margin industry, against larger competitors who have not closed it themselves.
Catalysts
Wednesday, July 29, 2026 brings the second-quarter report, released after the market closes with a conference call at 5:00 p.m. Eastern. The March quarter set a reasonably demanding comparison. Sales rose 7% against the same quarter of 2025, and income before income taxes came to 2.7 cents per dollar of sales against 1.3 cents a year earlier. Whether that progress continued is the single most informative line in the release, because the entire valuation argument rests on operating margin climbing from roughly 3% toward something materially higher.
The mix inside the number matters as much as the number. Advanced computing and communications work fell 27% across 2025 and then drove first-quarter growth in the Americas, so that line is volatile enough to swing a quarter on its own. Aerospace and defence went the other way, "decreased 2% to $119.8 million from $121.9 million" in the March quarter on "certain programs going end-of-life". Watching which of those two moves further tells you more about the next two years than the headline revenue figure will.
Capital return is a smaller but real signal. The board lifted the quarterly dividend from "$ 0.165 to $ 0.17 per common share" and paid "$ 6.1 million" on January 13, 2026 to holders of record at the end of December. That is a modest commitment against the cash balance, and its continuation is the most straightforward evidence available that management sees the current order book converting to cash rather than to inventory.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- PLXS (PLEXUS CORP.)
- FY2025 10-K: In addition, current and prospective customers continually evaluate the merits of designing, manufacturing and servicing products internally and may choose to design, manufacture or service products (including products or product types that we currently design, manufacture or service for them) themselves rather than…
- FY2025 10-K: …Increased competition could result in significant price reductions, reduced sales and margins, or loss of customers or market share. The majority of our net sales come from a relatively small number of customers and a limited number of market sectors; if we lose a major customer or program or if there are challenges…
- CLS (CELESTICA INC.)
- FY2025 10-K: …condition and results of operations. See " We are dependent on a limited number of customers and end markets and are sensitive to their investment cycles and operating conditions. Revenue decline or loss of any major customer could have a material adverse effect on our operating results, financial position and cash…
- FY2025 10-K: …(OEM) solutions, which may include considerations of cost, software, after-market services, and the degree of customization necessary, among others. We also face indirect competition from current and prospective customers who evaluate our capabilities and commercial models against the merits of manufacturing products…
- FLEX (FLEX LTD.)
- FY2025 10-K: …of our component capabilities, together with start-up and integration costs, has in the past adversely affected, and may in the future adversely affect, our margins and profitability. Our components business, which includes our data center power systems business, is part of our strategy to improve our competitive…
- FY2025 10-K: …2025, mitigates data center heat challenges with patented microconvective cooling technology, capable of cooling over 3,000W, as well as offering complete turn-key microconvective cooling systems that include fully-sealed cold plates, direct liquid-to-chip products, and a coolant distribution unit (CDU). COMPETITION…
- JBL (JABIL INC)
- FY2025 10-K: …in which an activity takes place. We believe that the principal competitive factors in the manufacturing services market are: cost; accelerated production time-to-market; higher efficiencies; global locations; rapid scaling of production; advanced technologies; quality; and improved pricing of components. We believe…
- FY2025 10-K: % * * * Amount was less than 10% of total. (1) Sales to this customer were reported primarily in the Intelligent Infrastructure segment. (2) Sales to this customer were reported in the Connected Living and Digital Commerce segment. The Company procures components from a broad group of suppliers. Some of the products…
- SANM (Sanmina Corporation)
- FY2025 10-K: …harm our financial performance. The EMS industry is highly competitive and the industry has experienced a surplus of manufacturing capacity. Our competitors include major global EMS providers, including Benchmark Electronics, Inc., Celestica, Inc., Flex Ltd., Hon Hai Precision Industry Co., Ltd. (Foxconn), Jabil Inc.…
- FY2025 10-K: …the future. Fluctuations in our gross margin may be caused by a number of factors, including: • the impacts of supply chain constraints on our operations, the operations of our suppliers and on our customers' businesses; • capacity utilization which, if lower, results in lower margins due to fixed costs being…
- UCTT (Ultra Clean Holdings, Inc.)
- FY2025 10-K: . Although some of our business, including the cleaning, coating and analytical services that support the semiconductor chip market, are less susceptible to such fluctuations, recurring slowdowns in the industries we serve have historically had adverse effects on our overall operating results. Demand shifts in these…
- FY2025 10-K: …effectiveness, we have expanded our total available market significantly. • Develop or acquire solutions that allow our customers to succeed at the leading edge of the semiconductor processing nodes . Leveraging our technology roadmap assessments and broad customer engagements, we continue to expand the number and…
- ICHR (Ichor Holdings, Ltd.)
- FY2025 10-K: …support future growth. In addition to providing high quality and reliable fluid delivery subsystems and components, one of our principal strategies is delivering lead-times that provide our customers with the required flexibility needed in their production processes. We have accomplished this by investing in scalable…
- FY2025 10-K: …devote greater resources to the development, promotion, sale and support of their products and services, and reduce prices to increase market share. In addition to organic growth by our competitors, there may be merger and acquisition activity among our competitors and potential competitors that may provide our…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Benchmark press release, July 16, 2026