Shares in power and data transmission products maker Volex (LON:VLX) soared after the company raised its FY27 earnings outlook. In a statement ahead of its AGM, the firm said it had experienced ‘a very strong start’ to the financial year.
Data centres driving demand
Basingstoke-based Volex makes power cables, custom wiring harnesses, EV (electric vehicle) charging solutions and high-speed data transfer cables. Its main markets are consumer electricals, EVs, medical, heavy machinery and complex industrial technology like robots, automation and data centres.
For the four months to end-July, the company posted 8% like-for-like revenue growth. Unsurprisingly, the increase was driven by data centres where demand continued at the ‘elevated’ exite rate of FY26.
Raising the outlook for earnings
The headline rate partly reflects the prior-year build-up of data centres, and the firm expects growth to normalise during FY27. Meanwhile, revenue was supported by EV and electricfication products, consumer electronics and demand from the medical and heavy industrial segments.
The firm suggested a better guide to underlying momentum was sequential trading, taking the average of the first months of FY27. On this basis, average monthly revenue was 8% above the prior year.
Still, due to the better-than-expected four-month performance and improved operating leverage, the firm now sees FY27 earnings above market expectations. On an underlying basis, operating profit will therefore beat the consensus of $138 million.
Volex is yet another mid-cap UK engineering marvel which the market had more or less overlooked until this year. While it’s encouraging to see underlying demand from consumer, medical, EV and industrial markets improve, there’s no hiding the importance of AI.
We’ve already written about the company twice this year, flagging the significance of its exposure to data centres. The firm also raised its guidance in March thanks to demand for high-speed data transmission products.
The shares moved to the Main Market last month and they must be a favourite to join the FTSE 250 at the next reshuffle. Given it has a long enough history, the next step is to add it to our CAPE model and check the valuation.
