Forecast-beating financial performance is sparking a dramatic revival for Volex (VLX). Shares in the AIM-listed power cables designer jumped more than 7% on Wednesday, hitting 438.5p, their highest since late 2021.
‘The strong momentum, and good visibility through to the financial year-end provides the board with confidence in delivering full year revenue ahead of current market consensus’, the company said in a statement.
| Volex (VLX) | Price: 440p | Market cap: £875m |
Company compiled consensus revenue data is pitched at $1,152.3 million, from a range of $1,145.1 million to $1,167.4 million. Average underlying operating profit forecast is $112.7 million, with a range of $111.7 million to $114.9 million.
As a rule of thumb, companies talk about beating forecasts when they believe an outperformance of 10% or more is likely over analyst expectations.
AI data centre demand
Volex is a somewhat unsung AI play, one of those picks and shovels businesses. It supplies advanced power and connectivity cables and solutions, which it says are ‘mission-critical’ to customers.
Exposure to AI’s structural growth comes through its expanding support of data centre operators. ‘Demand from data centre customers has been particularly strong, driven by sustained investment in AI and digital infrastructure’, said CEO Nat Rothschild.
Volex stock has been on a tear since April last year, more than doubling. That’s pushed valuation sharply higher (the end March 2026 PE is 21, falling below 18 by 2028).
Can it justify that valuation premium remains in question. Growth has averaged 21% and 17% in revenue and net income over the past three years, but that’s likely to slow to high single or low double digits ahead.
Tapping into the data centres market has clearly been a smart move, although we currently have limited info on how big this part of the business is versus other markets.
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