April 18, 2008 - Plexus Corp. (PLXS-NASDAQ) isn't perplexed by even complex contract electronics manufacturing. The company develops and manufactures electronic products for companies in the telecommunications, medical, industrial, and computer markets. Plexus provides product design and engineering and assembles printed circuit boards (PCBs), test equipment, and other electronic components. The company also offers prototyping, materials procurement, warehousing and distribution, and other support services.

Earnings have been strong over the last 4 years. Starting with a loss of 19 cents per share in 2003, eps (earnings per share) went to 31 cents in 2004, then almost doubled to 61 cents in '05, followed by a tripling in 2006 to $1.78. Last year, the trend was broken, and eps came in at $1.41. But analysts predict this full year will show $1.90 with $1.95 next year. Sales have been consistently higher since 2003 with last year's total at $1.55 billion. This year look for $1.825 billion and $2.025 billion next year. Over the next 5 years, analysts see sales growing by 11.5% a year, on average, while earnings increase by 10% a year, on average.

Sales were up 20% in the first quarter of 2008 compared to the same quarter last year. A large military contract will show up in the second quarter of this year but not in future quarters. Strong demand throughout its sector suggests continued improvement at least for the next several months. While the U.S. economy is slowing, Plexus's international sales will help diminish the adverse effect of it.

The company is recapitalizing, issuing debt of $150 million to buy back $200 million worth of stock. The company has an agreement with Morgan Stanley to buy half of the amount as quickly as possible, the other half will be purchased over the next year. With total float of 46.49 million shares, this program will take off about 6.6 million shares, more than 14% of available stock. That will bolster eps.

Other numbers: Current assets outnumber current liabilities by 2.2 to 1. There is no dividend. Return on Equity was 11.5% last year with expectations of 14.5% this year and next. Net profit margin was 4.3% last year with predictions of 4.4% this year and 3.9% next year. Book Value is $12.35 a share with analysts predicting $17.15 this year and $17.70 next year. In 2000 this stock traded at $81 a share, then hit a low of $7.40 in 2002.

Plexus has recovered from a swoon of a few years ago. Earnings are increasing. Management is focused on expanding its customer base and buying back stock. Things look fairly positive. Just remember that the U.S. economy is slowing and that sales to 2 customers account for 31% of its business.

- Company Web site: www.plexus.com

- Ted Allrich