Benchmark Electronics (BHE) AI Stock Analysis

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Benchmark Electronics

(NYSE:BHE)

68Neutral

Benchmark Electronics demonstrates strong financial management and strategic focus on growth sectors like Semi-Cap, which supports a positive outlook despite current revenue challenges. The technical indicators show bearish trends, but valuation metrics suggest fair pricing, providing a balanced view. Key risks include continued revenue declines in specific sectors and uneven market recovery.

Positive Factors

Earnings

BHE posted stronger than expected Q4 earnings with in-line revenues.

Growth Potential

Expectations of a return to modest growth for the full year are supported by healthy margins.

Market Demand

Solid demand trends across most of its market verticals support BHE's positive outlook.

Negative Factors

Inventory Challenges

Medical is likely to continue to be a headwind as customers continue destocking inventories.

Revenue Decline

BHE is delivering consistently high margins despite Y/T/D revenues being down 7%.

Benchmark Electronics (BHE) vs. S&P 500 (SPY)

Market Cap

$1.29B

Dividend Yield1.84%

Average Volume (3M)516.13K

Price to Earnings (P/E)20.7

Beta (1Y)1.26

Revenue Growth-6.44%

EPS Growth-2.60%

CountryUS

Employees11,700

SectorTechnology

Sector Strength45

IndustryHardware, Equipment & Parts

Share Statistics

EPS (TTM)1.73

Shares Outstanding36,095,562

10 Day Avg. Volume322,320

30 Day Avg. Volume516,129

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.54

Price to Cash Flow (P/CF)7.90

P/FCF Ratio8.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$51.00

Price Target Upside35.31% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Benchmark Electronics Business Overview & Revenue Model

Company DescriptionBenchmark Electronics, Inc. (BHE) is a global engineering and manufacturing services company, providing comprehensive solutions to original equipment manufacturers (OEMs) in industries such as aerospace and defense, medical technologies, complex industrials, and telecommunications. The company's core services include engineering design, technology solutions, and integrated manufacturing, catering to complex and highly regulated industries requiring precision and high-quality standards.

How the Company Makes MoneyBenchmark Electronics generates revenue primarily through its contract manufacturing services and integrated engineering solutions, serving a wide range of industries such as aerospace, medical devices, telecommunications, and industrial equipment. The company earns money by offering design and engineering services, supplying precision technology products, and providing complete supply chain management. Key revenue streams include long-term contracts with OEMs for designing and manufacturing complex electronic products, as well as partnerships with industry leaders to leverage technological advancements and enhance service offerings. Benchmark Electronics' ability to maintain strong relationships with its clients and adapt to technological changes significantly contributes to its earnings.

Benchmark Electronics Financial Statement Overview

Summary

Benchmark Electronics presents a solid financial profile with strong balance sheet performance and consistent profitability. Positive cash flow trends bolster its financial standing, though revenue contraction poses a challenge.

Income Statement

Positive

Benchmark Electronics shows moderate performance with stable revenue trends. While the latest annual revenue decreased compared to the previous year, gross profit margin improved slightly, indicating efficiency in cost management. Net profit margin remains stable, reflecting consistent profitability levels. EBIT and EBITDA margins are healthy, demonstrating strong operational management.

Balance Sheet

Positive

The company's balance sheet is robust with a strong equity base, demonstrated by a favorable equity ratio. The debt-to-equity ratio has significantly improved due to reduced total debt, enhancing financial stability. Return on equity is decent, suggesting effective utilization of equity to generate profits.

Cash Flow

Positive

Cash flow analysis indicates positive trends, with significant growth in free cash flow, showcasing improved cash generation capabilities. The operating cash flow to net income ratio suggests efficient conversion of income to cash. However, historical fluctuations in cash flow warrant cautious monitoring.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.66B	2.84B	2.89B	2.26B	2.05B
	Gross Profit
270.02M	271.07M	255.24M	205.90M	175.05M
	EBIT
109.41M	109.66M	90.07M	53.06M	44.28M
	EBITDA
109.41M	158.50M	141.07M	97.39M	74.45M
	Net Income Common Stockholders
63.33M	64.31M	68.23M	35.77M	14.05M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
315.15M	277.39M	207.43M	271.75M	390.81M
	Total Assets
2.14B	2.27B	2.23B	1.90B	1.74B
	Total Debt
115.73M	454.34M	411.64M	221.15M	212.33M
	Net Debt
-199.42M	176.95M	204.21M	-50.60M	-178.48M
	Total Liabilities
1.03B	1.20B	1.20B	930.08M	754.65M
	Stockholders Equity
1.11B	1.08B	1.03B	973.80M	989.59M
Cash Flow		Free Cash Flow
155.97M	96.56M	-224.24M	-44.80M	80.92M
	Operating Cash Flow
189.22M	174.29M	-177.47M	-2.62M	120.44M
	Investing Cash Flow
-32.77M	-77.14M	-41.17M	-41.88M	-34.38M
	Financing Cash Flow
-109.11M	-23.58M	159.23M	-73.95M	-57.53M

Benchmark Electronics Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price37.69

Price Trends

50DMA

38.43

Negative

100DMA

42.17

Negative

200DMA

42.59

Negative

Market Momentum

MACD

-0.91

Negative

RSI

49.84

Neutral

STOCH

61.45

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BHE, the sentiment is Neutral. The current price of 37.69 is above the 20-day moving average (MA) of 36.07, below the 50-day MA of 38.43, and below the 200-day MA of 42.59, indicating a neutral trend. The MACD of -0.91 indicates Negative momentum. The RSI at 49.84 is Neutral, neither overbought nor oversold. The STOCH value of 61.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for BHE.

Benchmark Electronics Risk Analysis

Benchmark Electronics disclosed 36 risk factors in its most recent earnings report. Benchmark Electronics reported the most risks in the “Ability to Sell” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Benchmark Electronics Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BHE	68 Neutral	$1.29B	20.69	5.78%	1.84%	-6.44%	-2.60%
BELFA	68 Neutral	$871.78M	19.96	11.68%	0.38%	-16.41%	-44.24%
PENG	65 Neutral	$847.57M	―	-1.21%	―	4.71%	95.60%
TTMI	62 Neutral	$1.88B	35.29	3.66%	―	9.41%	―
Sector *	59 Neutral	$10.59B	10.09	-6.37%	3.05%	7.44%	-10.67%
ROG	57 Neutral	$1.02B	39.30	2.08%	―	-8.62%	-53.84%
MLAB	45 Neutral	$632.04M	―	-89.38%	0.56%	11.68%	-26360.70%

* Technology Sector Average

Performance Comparison

BHE

Benchmark Electronics

37.69

7.88

26.43%

MLAB

Mesa Laboratories

116.32

15.05

14.86%

ROG

Rogers

57.05

-52.49

-47.92%

TTMI

TTM Technologies

20.04

5.26

35.59%

PENG

Penguin Solutions

17.00

-1.49

-8.06%

BELFA

Bel Fuse

66.40

-4.84

-6.79%

Benchmark Electronics Earnings Call Summary

Earnings Call Date: Jan 29, 2025 | % Change Since: -13.26% | Next Earnings Date: Apr 29, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a company navigating mixed market conditions with strong operational execution. While there are notable achievements in margin expansion and sector-specific growth, significant challenges remain in certain areas such as Medical and AC&C. The company's focus on operational excellence and strategic investments, particularly in Semi-Cap, provides a positive outlook despite the current revenue decline.

Highlights

Strong Margin Expansion and Cash Flow

Non-GAAP gross margin increased by 60 basis points and operating margin by 20 basis points year-over-year. The company generated over $156 million in free cash flow in the year, with a significant reduction in inventory by over 130 million or 20%.

Semi-Cap and A&D Growth

Semi-Cap revenue increased 18% year-over-year in Q4 and 12% for the full year, supported by new wins and share gains. A&D revenue was up 15% in Q4 and 20% for the full year, driven by strong demand in Commercial Aerospace and Defense sectors.

Operational and Financial Stability

Despite mid-single-digit revenue declines, the company maintained strong operational execution with non-GAAP EPS exceeding guidance. Cash conversion cycle improved, and debt was further reduced by $22 million in the quarter.

Expansion Plans in Penang

Benchmark plans to break ground on a fourth building in Penang, Malaysia, to support Semi-Cap growth, indicating confidence in future demand and new program wins.

Lowlights

Revenue Declines in Medical and AC&C

Medical revenue was down 7% year-over-year in Q4 and 19% for the full year, impacted by inventory rebalancing and demand weakness. AC&C revenue decreased 48% in Q4 and 30% for the full year, driven by HPC program completions and ongoing weakness in communications.

Overall Revenue Decline

Total revenue for the fiscal year 2024 was $2.7 billion, down 6% from the prior year, reflecting challenges in several market sectors.

Mixed Market Recovery

Despite growth in some sectors, the broader market recovery remains uneven, with ongoing challenges in Complex Industrials and AC&C expected to persist into the first half of 2025.

Company Guidance

During the Benchmark Fourth Quarter and Fiscal Year 2024 Earnings Call, the company provided guidance for the first quarter of fiscal year 2025. They expect revenue to range between $620 million and $660 million. Non-GAAP gross margin is anticipated to be between 10% and 10.2%, consistent with recent quarters. Non-GAAP SG&A expenses are forecasted to fall within $34 million to $36 million, and the non-GAAP operating margin is projected to be between 4.5% and 4.7%. Non-GAAP diluted earnings per share are expected to range from $0.48 to $0.54, with a Q1 effective tax rate estimated to be between 23% and 24%. The company plans to invest $15 million to $20 million in CapEx during Q1, primarily supporting a new building in Penang, Malaysia, and expects free cash flow in Q1, contributing to a full-year forecast of $50 million to $80 million, inclusive of elevated CapEx spend associated with this investment.

Benchmark Electronics Corporate Events

Executive/Board ChangesShareholder Meetings

Benchmark Electronics Announces Board Member Departures

Neutral

Apr 4, 2025

On April 2 and 3, 2025, Ramesh Gopalakrishnan and Jeffrey S. McCreary informed Benchmark Electronics’ Board of Directors of their decision not to seek re-election at the upcoming annual shareholders’ meeting on May 14, 2025. Their departures are not due to any disagreements with the company. The Board has nominated Glynis A. Bryan, former CFO of Insight Enterprises, for election to the Board.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.