Lincoln International’s Electronics Group released its 2009 Q1 Electronics Manufacturing Services (EMS) Stock Index report. The report draws attention to:
- Quarterly performance of the EMS Stock Index versus the S&P Index
- Relative market valuations of each EMS Tier
- Current financial data for each company in the index
Information for EMS companies and relative EMS stock value performance in the firm’s EMS universe study is based on sales dollar figures, by tier, as follows:
- Large (Tier I)…Greater than $3 billion
- Mid (Tier II)…$300 million to $3 billion
- Small (Tier III)…$150 million to $300 million
- Micro (Tier IV)…Below $150 million
For each tier, the current period’s total market cap is calculated, divided by the base period’s total market cap and then multiplied by the base index (1000). The result is the plotting of the index value as shown below.
Looking at the EMS Stock Index by Size graph, above, highlights include:
- Large Index has decreased (6.4%) from last quarter
- Mid Index has decreased (18.6%) from last quarter
- Small Index has decreased (22.2%) from last quarter
- Micro Index has decreased (10.1%) from last quarter
Similar to the S&P 500 Index, the EMS Stock Index is a market cap weighted composite index. The index is prepared by selecting a base period, in this case, Q1 2003, and totaling the market caps of the companies for each tier in this period.
Looking at EMS companies by tier, based on quarter-over-quarter share price performance, winners and losers can be identified:
| Winner’s Circle | Tier | |
| Flextronics International | 13% | I |
| Sypris Solutions Inc. | 49% | II |
| Key Tronic Corp. | (3%) | III |
| Winland Electronics Inc. | (8%) | IV |
| Worst Performers | Tier | |
| Sanmina-SCI Corp. | (34%) | I |
| CTS Corp. | (35%) | II |
| LaBarge Inc. | (42%) | III |
| Simclar Inc. | (24%) | IV |
From a valuations perspective (compared to last quarter) multiples were evaluated across all four tiers with findings as follows:
- Multiples for Large tier EMS companies decreased due to a decrease in equity values and net debt.
- Mid tier EMS company multiples increased slightly because of lower EBITDA.
- Small tier EMS company multiples decreased due to lower equity values and higher EBITDA.
- Multiples for Micro tier EMS companies decreased due to lower equity values.
* Value calculated as Market Cap (03/31/09) plus debt, preferred equity, minority interest less cash
Electronics manufacturing services (EMS) stock index data follows:
Source: Lincoln International Electronics Group, VentureOutsource.com, April 2009
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