Electronic manufacturing services company Plexus (NASDAQ: PLXS) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 6% year on year to $1.02 billion. On the other hand, next quarter’s revenue guidance of $1.05 billion was less impressive, coming in 3.3% below analysts’ estimates. Its non-GAAP profit of $1.90 per share was 11% above analysts’ consensus estimates.

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Company Overview

With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $4.03 billion in revenue over the past 12 months, Plexus is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Plexus’s sales grew at a mediocre 4.1% compounded annual growth rate over the last five years. This shows it couldn’t generate demand in any major way and is a tough starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Plexus’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3.4% annually.

This quarter, Plexus grew its revenue by 6% year on year, and its $1.02 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 8.6% over the next 12 months, an improvement versus the last two years. This projection is noteworthy and suggests its newer products and services will fuel better top-line performance.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Plexus’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 5% over the last five years. This profitability was lousy for a business services business and caused by its suboptimal cost structure.

Analyzing the trend in its profitability, Plexus’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q2, Plexus generated an operating margin profit margin of 5.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Plexus’s EPS grew at a spectacular 13.8% compounded annual growth rate over the last five years, higher than its 4.1% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Plexus, its two-year annual EPS growth of 8.7% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, Plexus reported EPS at $1.90, up from $1.45 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Plexus’s full-year EPS of $7.14 to grow 4.2%.

Key Takeaways from Plexus’s Q2 Results

We enjoyed seeing Plexus beat analysts’ EPS expectations this quarter. We were also happy its EPS guidance for next quarter outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed. Overall, this quarter could have been better. The stock traded down 1.4% to $132 immediately after reporting.

Should you buy the stock or not? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.