The U.S. financial market watchdogs at Barron's recently set their sights on Molex, and liked what they saw. Despite getting 18% of its annual revenue from Japanese electronics manufacturers hurt by the recent earthquake, "this is a much higher quality company than the market is giving them credit for right now," said one analyst quoted in a recent installment of Barron's Weekday Trader report. Indeed, as multi-year efforts to bolster profit margins begin to pay off, many investors think Molex's earnings are now "poised to grow at a brisk clip. "
As reported by Barron's:
"It hasn't always been easy. Molex's earnings withered during the recession as sales and profit margins crashed. Now, industry sales are growing roughly 7% annually amid an economic rebound, the proliferation of smartphones and the arrival of tablets and other next-generation electronic devices.
Molex has shifted big portions of its manufacturing to China. Heavy spending in research and development is paying off, with roughly 40% of its revenue stemming from products developed in the last three years. And operating profit margins are rising thanks to a three-year restructuring initiative completed last year.
"It is a turnaround story," says Sherri Scribner, an analyst with Deutsche Bank. "They have been working on improving margins and the business model for a long time, and they are finally getting traction from it."
Full Story: Molex Is Making the Right Connections (online.barrons.com)
