PLEXUS CORP. (PLXS): what the price assumes

In the published model solve dated 2026-Q2, anchored at $274.72, PLEXUS CORP. (PLXS) is priced for today's economics sustained for ~7.8 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 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/PLXS

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 9.8% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.

How unusual the bet is: elevated

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

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.

Families that justify the price: Relative, 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 9.1%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Bullet Takeaways

• At about $300 the market pays roughly 36 times company-wide operating income for a contract manufacturer that runs a 5% operating margin, and only the growth-DCF frame reaches the price. The asset, earnings-power, and peer-multiple frames all sit well below it, so the premium is a bet on durable compounding the static methods cannot price.
• That bet implies operating profit growing near its self-funding ceiling for about nine years, which the engine flags as elevated; only about 17% of comparable fast-growers sustained that pace for nine years. The recent results support the direction: record fiscal-Q2 revenue of $1.164 billion, up about 19% year over year.
• The franchise is built on focus and capital discipline: Plexus concentrates on complex, regulated aerospace/defense, healthcare, and industrial products, targets a 15% return on invested capital, and wins programs that ramp into recurring revenue (30 wins worth $355 million annualized in the latest quarter).

Bull Case

Lead with capital allocation, because for an electronics-manufacturing-services company that is where durable value is made or lost. EMS is a low-margin business by nature, Plexus runs around a 5% operating margin, so what matters is not the margin but the return on the capital deployed to earn it. Plexus's stated financial model is explicit: a 9% to 12% compounded annual revenue growth target while earning a 15% return on invested capital, a level that significantly exceeds its cost of capital and represents positive economic return. The company has been delivering toward it, with ROIC improving to 14.6% from 11.8% year over year and economic return rising. A contract manufacturer that earns well above its cost of capital is creating value despite thin margins, and that discipline is the foundation of the premium.

The business is also winning the right kind of revenue. Plexus concentrates on complex, highly regulated products in aerospace and defense, healthcare and life sciences, and industrial markets, where the engineering content is high and the manufacturing is hard to switch. In fiscal Q2 2026 it announced 30 manufacturing program wins estimated to contribute $355 million in annualized revenue once fully ramped, and it posted record revenue of $1.164 billion, up about 19% year over year, with non-GAAP EPS of $2.05. Those program wins are the leading indicator: each is a multi-year production relationship that builds the recurring base. Management guided fiscal Q3 revenue to $1.20 to $1.25 billion with non-GAAP operating margin of 5.9% to 6.3%, so both the top line and the margin are moving up.

The balance sheet and the demand backdrop support the durability the price is paying for. Plexus carries about $259 million of net cash with modest debt and interest coverage near 20 times, so it funds growth and buybacks from its own cash. The end-market mix is favorable: healthcare/life sciences and industrial each around 40% of revenue with aerospace/defense the rest, all areas of structural electronics-content growth, and EMEA revenue is accelerating, up about 39% over three years off a smaller base. The engine characterizes Plexus as a moat-or-durability premium, where only the growth-DCF reaches the price, and that is the right frame for a focused, high-ROIC manufacturer winning complex programs into growing regulated markets, where the static no-growth methods structurally understate a compounding book of business.

Bear Case

The moat-erosion case is the right lead, because the thing that quietly undermines a contract manufacturer is the customer deciding it no longer needs one. Plexus's own 10-K names the risk plainly: current and prospective customers continually evaluate the merits of designing, manufacturing, and servicing products internally, and may choose to do so themselves rather than outsource to Plexus, including products Plexus currently makes for them. Insourcing is the structural threat to the entire EMS model, and it is most acute exactly when a program becomes large and profitable enough to be worth bringing in-house. The filing also flags that new entrants competing with Plexus's customers, or shifts in its end markets, can hurt results, so Plexus is doubly exposed, to its customers' competitive fortunes and to their make-versus-buy decisions.

The economics leave little room for the premium if growth slows. Plexus runs a roughly 5% operating margin, which means small swings in utilization, mix, or component costs move the bottom line disproportionately, and the price at 36 times operating income assumes that thin margin compounds for years. The static frames make the gap stark: earnings-power value capitalizing normalized operating income lands near $70, residual income and the Graham number in the $85 to $92 range on a $54.55 book value, all a fraction of the $300 price (June 28, 2026). The SBC-adjusted free-cash-flow value is especially low, in the low $20s, because stock-based compensation is a meaningful cost and reported free cash flow is modest, working capital in a fast-growing manufacturer consumes cash as inventory and receivables build. Only the growth-DCF reaches the price, and only on assumptions of sustained high growth that the history says few companies maintain.

Concentration and cyclicality round out the risk. Plexus's revenue is geographically concentrated, with about 87% from APAC manufacturing, and customer-concentrated by the nature of large EMS programs, so the loss or insourcing of a major program is a real swing factor. The end markets, while attractive, are not immune to cycles: industrial demand tracks the economy, healthcare and aerospace programs can be delayed, and a slowdown would expose the operating-leverage-in-reverse problem at a thin margin. Competitors like Benchmark Electronics, Ultra Clean, and the larger EMS players compete for the same complex programs, capping pricing power. For a stock priced for nine years of ceiling-rate compounding, the bear case is straightforward: an EMS business at 36 times operating income is being valued like a software franchise, when its moat is service quality and switching cost, not a structural barrier, and the conservative frames that sit far below the price are the more honest anchor if growth or margin disappoints.

Valuation

Plexus is priced as a durable compounder, which is an unusual frame for a contract manufacturer. At about $300 the market pays roughly 36 times company-wide operating income, which inverts to operating profit growing near its self-funding ceiling for about nine years, solved at a 10% cost of capital. The engine flags the composite as elevated, above what fundamentals comfortably support, and notes that only about 17% of comparable fast-growers sustained that pace for nine years. The implied rate is within what Plexus has recently delivered, so the demand is on duration: the price needs the high growth to persist for the better part of a decade.

The method cross-section is lopsided, which is the signature of a moat premium. Only the growth family reaches the price: the exit-multiple DCF lands near $256 and the discounted future market cap near $245, close to the quote, while the perpetual-growth DCF on a more conservative growth input lands far lower. Every other family sits well below. The earnings-power value capitalizing normalized operating income is near $70, the asset family (residual income, Graham number, excess return on a $54.55 book value with a 12.6% ROE) lands in the $74 to $92 range, and the relative family is mixed, with EV/EBITDA near $157 but sector P/E and the PEG and Lynch methods higher on the strong historical EPS growth. The engine's characterization is exact: asset, earnings-power, and peer-multiple models all say richly valued, and only the growth-DCF reaches the price.

The honest synthesis is that Plexus is fairly valued only if it remains a 15%-ROIC, mid-teens-growth franchise for years, and rich if you anchor on its thin current margins. The reconciliation is the quality of the business, a focused, high-ROIC manufacturer winning complex regulated programs with a growing recurring base, which justifies a premium to a no-growth EMS multiple.

Catalysts

The catalysts are the quarterly revenue and margin cadence and the flow of new program wins. Plexus reported record fiscal Q2 2026 revenue of $1.164 billion, up about 19% year over year, with GAAP operating margin of 5.3%, non-GAAP operating margin of 6.0%, and non-GAAP EPS of $2.05, after a strong fiscal Q1 ($1.070 billion revenue, non-GAAP EPS $1.78). It guided fiscal Q3 to $1.20 to $1.25 billion of revenue with non-GAAP operating margin of 5.9% to 6.3%, so the trajectory toward higher revenue and margin is the central thing to watch. The 30 program wins announced in fiscal Q2, worth $355 million in annualized revenue once ramped, are the leading indicator: the pace of new wins and the speed at which they convert to production revenue drive the multi-year growth the valuation assumes.

The structural catalysts are margin expansion and capital returns. Plexus targets a 15% return on invested capital against a financial model of 9% to 12% revenue growth, and progress toward higher operating margin (which has been climbing toward the 6% non-GAAP level) is the clearest path to justifying the premium. The company funds buybacks from its net-cash balance sheet, so continued repurchases support per-share value. Regional momentum, with EMEA revenue up about 39% over three years, is a secondary growth lever. Sell-side sentiment is constructive, with a Buy-leaning consensus and recent target increases (Stifel to $330), though targets vary widely and some sit below the current price. The clearest upside triggers are sustained program wins, margin expansion toward management's targets, and continued high ROIC; the clearest risk triggers are a major customer insourcing a program, a slowdown in industrial or aerospace demand, or margin compression that exposes the thin EMS economics underneath the premium multiple.

Peer Cohorts (Per Segment, With Filing Citations)

AMER (reported)

• CLS (CELESTICA INC.)
• FY2025 10-K: -determined limits by customer. This agreement provides for automatic annual one-year extensions. This agreement may be terminated at any time by the bank or by us upon 3 months' prior notice, or by the bank upon specified defaults. We are required to comply with certain covenants, including those relating to the…
• FY2025 10-K: …31, 2025 or December 31, 2024. We are party to an agreement with a third-party bank to sell up to $450.0 million in A/R on an uncommitted, revolving basis, subject to pre-determined limits by customer. This agreement provides for automatic annual one-year extensions. This agreement may be terminated at any time by…
• BHE (BENCHMARK ELECTRONICS, INC.)
• FY2025 10-K: …market opportunities and instead focus on 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. In the AC&C markets, we focus on customers with more complex requirements…
• FY2025 10-K: …Malaysia, Mexico, Netherlands, Romania, and Thailand. Our network also includes design centers that lead customer engagements and provide solutions to customers in the Americas, Asia, and Europe. We hold the following accreditations, certifications and registrations, as applicable by geographic region: Americas Asia…
• FLEX (FLEX LTD.)
• FY2025 10-K: "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has…
• FY2025 10-K: EMENTS (Continued) the FASB issued ASU 2025-01 on the same topic to clarify the amendments for ASU 2024-03 are effective for the Company in the fourth quarter of fiscal year 2028. In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which expands disclosures…
• JBL (JABIL INC)
• FY2025 10-K: …consignment components. Investing Activities Net cash used in investing activities during the fiscal year ended August 31, 2025, consisted primarily of the acquisition of Pharmaceutics International, Inc., Mikros Technologies, LLC and certain other third-party assets, capital expenditures principally to support…
• FY2025 10-K: October2025Member us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:NetInvestmentHedgingMember 2025-08-31 0000898293 jbl:ForeignExchangeContractDerivativeDueOctober2025Member us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:NetInvestmentHedgingMember…
• SANM (Sanmina Corporation)
• FY2025 10-K: …solutions. These teams may include subject matter experts in design, specific technology components, services, products, and supply chain. These teams create a hub for interaction between the customer and our locations, providing local support to customers worldwide. End-to-End Solutions. We provide solutions…
• FY2025 10-K: …original equipment manufacturers ("OEMs") in the following industries: industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure. Our customer-focused organization with 39,000 employees, including 4,000 temporary employees, supports our customers from 20 countries on…
• AMKR (AMKOR TECHNOLOGY, INC.)
• FY2025 10-K: …package design, packaging and test services addresses the diverse needs of our customers. We provide turnkey solutions that include package design, wafer bump, wafer probe, wafer back-grind, packaging, burn-in, system level and final test and drop shipment services. Our extensive line of packaging and test services…
• FY2025 10-K: …training and development programs that enable the continued learning and growth of our employees, and senior management regularly meets to share and implement best practices among our various facilities. Amkor also uses human capital initiatives to support our broad geographic footprint. For career development and…
• ICHR (Ichor Holdings, Ltd.)
• FY2025 10-K: , as well as provide growth opportunities for specialized subsystems suppliers like us. Our goal is to be a leading supplier of fluid delivery subsystems and components to OEMs engaged in manufacturing capital equipment to produce semiconductors and to leverage our technology and products to expand the share of our…
• FY2025 10-K: …company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b‑2 of the Exchange Act. Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging Growth…
• UCTT (Ultra Clean Holdings, Inc.)
• FY2025 10-K: December 26, 2025, the Company had $3.4 million of outstanding letters of credit and $46.6 million of available commitments remaining under the letter of credit facility. Under the Credit Agreement, the Company may elect that the Term Loan bear interest at a rate per annum equal to either (a) "ABR" (as defined in the…
• FY2025 10-K: …of extinguished debt of $3.6 million in the other income (expense), net in the Consolidated Statements of Operations for the fiscal year ended December 27, 2024. On October 8, 2024, the Company entered a Seventh Amendment further reducing the interest rate applicable to the term loan facility by 0.25% per annum. On…

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.