Multi-Fineline Electronix, Inc. (MFLX) is riding the smartphone wave as sales rose 4.1% in the third quarter. The company has surprised on estimates 3 out of the last 4 quarters by an average of 26.33%. MFLEX has a price-to-book ratio of 1.87.

Company Description

Multi-Fineline Electronix, which calls itself MFLEX, is one of the world’s largest producers of flexible printed circuits (FPC) and flexible printed circuit assemblies (FPCA).

The company’s products are used in mobile phones, smart mobile devices, portable bar code scanners, personal digital assistants, computer/storage devices, and medical devices.

MFLEX Surprised by 19.35% in the Fiscal Third Quarter

On Aug 6, MFLEX reported fiscal third quarter results that easily beat the Zacks Consensus Estimate by 6 cents. Earnings per share were 37 cents compared to 34 cents in the year ago period.

Sales rose 4.1% to $174.5 million on the strength of higher sales of flex assemblies for smartphones and other portable consumer electronic devices that are seeing strong demand.

Gross margin rose to 14.3% from 13.8% in the third quarter of 2008.

Cash on hand continued to rise, with cash, cash equivalents and short-term investments increasing $20.6 million to $127.3 million since Mar 31, 2009.

Fourth Quarter Outlook Brightens

The company is bullish about the remainder quarter of fiscal 2009 as its customers will be ramping up production of smartphones and other consumer devices ahead of the holiday season. MFLEX expects sales to rise to the range of $190 to $205 million with gross margin between 13.5% and 15.5%.

Zacks Consensus Estimates Rise

Covering analysts liked the earnings report as fourth quarter and fiscal 2009 Zacks Consensus Estimates jumped.

The fourth quarter Zacks Consensus Estimate rose 7 cents to 44 cents in the last week with 3 out of 4 analysts raising.

The full year Zacks Consensus Estimate climbed 8.2% to $1.72 from $1.59 per share in the last 7 days.

Value Fundamentals

MFLEX is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 15.42. The company has a stellar 5-year average return on equity (ROE) of 15.88%.

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