At $114.75 the shares need $4.58 of fiscal 2027 adjusted earnings at 25 times. I model $5.40 of fiscal 2028 earnings and a 16.7 times multiple after the Axiom split, which is a $90 stock.
Key points
- $114.75 prices fiscal 2027 midpoint adjusted earnings of $4.58 at 25 times.
- $5.40 is my fiscal 2028 earnings estimate after higher capex, preferred coupons and EPC interest.
- 16.7 times that earnings is $90, 21% below today’s close.
The call
The market is too optimistic. Twenty-five times next year’s adjusted profit treats a contract manufacturer plus a still-unseparated power unit as a durable infrastructure compounder. Cash conversion is guided to about 40% this year because of spin costs and $1.5, $1.6 billion of capex.
I believe fiscal 2028 earnings of $5.40 at a mid-teens multiple. Remaining Flex is a mid-single-digit manufacturer. Axiom still needs a completed EPC close, a 2027 spin, and a $2 billion preferred that Flex must redeem if the split slips.
Revenue ($ billions) and operating marginSEC filings through Q1 FY27; my FY27–FY28E. Margin on right axis.
Valuation
| Item | Figure |
|---|
| Fiscal 2028 revenue (mine) | $38.0 billion |
| GAAP operating margin | 6.0% |
| Fiscal 2028 EPS (mine) | $5.40 |
| Multiple | 16.7 times |
| 12-month target | $90 |
Sixteen to seventeen times is a rich EMS multiple once Axiom is public and the story is two listed names, not one scarcity vehicle. Asymmetry is poor: a clean spin and 8% margins could support the current print; a delayed split or cash miss cuts more than 20%.
What $114.75 needs versus my FY28 earningsAdjusted EPS history from company releases; my FY28E. Price line is 25 times FY27 midpoint.
Risks
- CPI booked work cancels or hyperscalers insource power and cooling; watch sequential CPI sales on October 28.
- EPC close or Axiom Form 10 conditions slip past first-quarter 2027; watch 8-Ks and preferred closing.
- Capex stays above $1.5 billion into fiscal 2028; watch conversion versus the 40% guide.
What would change my mind
Fiscal 2028 cash conversion returning toward 60% with CPI still growing above 40% after the spin.