In a recent transaction, Tan Kwang Hooi, Group President of Flex Ltd. (NASDAQ:FLEX), sold 11,570 shares of the company's stock on June 12, 2024, for an average price of $32.13 per share, totaling over $370,000. The sale was part of a move to cover tax withholding obligations related to the vesting of performance-based restricted share units (PSUs).
The transaction was disclosed in a filing with the Securities and Exchange Commission. According to the filing, the actual sales prices of the shares ranged from $31.79 to $32.71, reflecting a weighted average sale price. The executive has committed to providing further details regarding the number of shares sold at each price upon request.
The sale occurred immediately after the company certified the achievement of a performance criterion, resulting in the vesting of PSUs awarded to Mr. Tan on June 9, 2021. The vested PSUs were subject to applicable taxes upon delivery, prompting the sale to cover the associated tax liabilities.
In addition to the sale, the filing also reported the acquisition of shares by Mr. Tan. On June 11, 2024, he acquired 21,516 shares as part of the PSU award, and on June 12, he received 35,971 unvested restricted share units (RSUs) that are set to vest in three equal annual installments starting June 12, 2025. These transactions were non-monetary and are part of the company's long-term incentive plans for executives.
Following these transactions, Mr. Tan's ownership in Flex Ltd. includes various tranches of unvested RSUs with different vesting schedules. The total number of shares owned by Mr. Tan following the transactions is 196,947, which includes vested and unvested shares.
Investors often monitor insider transactions as they provide insights into executives' perspectives on the company's performance and future prospects. The recent transactions by Flex Ltd.'s Group President may be of particular interest as they involve both the acquisition of performance-based shares and the sale of shares to satisfy tax obligations.
"In other recent news, Flex announced its acquisition of FreeFlow, a specialist in asset disposition and digital circular economy tracking. This acquisition is expected to boost Flex's product lifecycle services and promote sustainability by facilitating the sale of surplus and returned inventory. FreeFlow's platform will complement Flex's existing services, providing customers with additional revenue generation opportunities and supporting their environmental commitments.
On the financial front, Flex reported Q4 and fiscal year 2024 results, revealing resilient growth despite a decrease in revenue. Q4 revenue was $6.2 billion, a 12% year-over-year decrease, and the full-year revenue was $26.4 billion, a 7% drop. However, profitability metrics such as gross profit, operating income, and earnings per share (EPS) showed an increase.
In addition to these recent developments, Flex completed significant share buybacks in fiscal year 2024, totaling $1.3 billion. The company's outlook for fiscal 2025 includes a prediction of flat to 3% decline in revenue, with adjusted operating margins between 5.2% and 5.4%, and an adjusted EPS between $2.30 and $2.50. Flex's CEO, Revathi Advaithi, discussed the Flex Forward strategy, aiming for mid-single-digit revenue growth and 20% EPS growth."
InvestingPro Insights
In the context of Flex Ltd.'s (NASDAQ:FLEX) recent insider transactions, it's valuable to consider the company's financial performance and market trends. According to InvestingPro data, Flex Ltd. boasts a market capitalization of $12.85 billion and is trading at a P/E ratio of 13.84, which reflects a company potentially undervalued relative to near-term earnings growth. Moreover, the company's high return over the last year, with a 65.24% price total return, aligns with the significant price uptick observed over the last six months, demonstrating robust market performance.
InvestingPro Tips highlight that Flex Ltd. has been recognized as a prominent player in the Electronic Equipment, Instruments & Components industry, which may have contributed to its strong return over the past five years. Furthermore, management's strategy of aggressively buying back shares, as indicated by a high shareholder yield, suggests confidence in the company's value and a commitment to returning capital to shareholders.
These financial metrics and strategic moves may offer some context to the recent insider selling by Group President Tan Kwang Hooi. While the sale was primarily for tax purposes, investors might view the company's buyback strategy and its position in the industry as signs of underlying strength. Additionally, the fact that analysts predict the company will be profitable this year, as per another InvestingPro Tip, could further reassure investors about the company's future prospects.
For readers seeking more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/FLEX. Using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking valuable insights that could inform their investment decisions.
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