BHE · Benchmark Electronics
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $74.32
Note written ·
How this view changed
- · Rating cut from Medium to Low. The note's kill line was crossed, 10 November 2026: The shares closed at $63.64 on 10 November 2026, below the $71.31 daily-close kill line set in the previous note, with no guidance change from Benchmark.
Price against the kill line
15.2% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $74.32, on record since 11 November 2026. The shares are down 25.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $74.32, which sits just over the 50-day average of closes and would show the shares leading the S&P 500 again; fourth-quarter 2026 revenue above the $855 million top of the guide would also show that.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 28 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 811
- Revenue, change on a year (%)
- +19.1
- Gross margin (%)
- 10.4
- Operating margin (%)
- 3.8
- Free cash flow, four quarters ($M)
- 117
- Net cash, cash less debt ($M)
- 133
- Price to earnings (×)
- 40.2
- Enterprise value to sales (×)
- 0.7
All filed numbers
What Benchmark Electronics reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 811 | +19.1 | 10.4 | 3.8 |
| first filed | 756 | +17.7 | 10.4 | 4.0 |
| first filed | 677 | +7.2 | 10.2 | 3.2 |
| first filed | 704 | +7.2 | 10.5 | 2.9 |
| first filed | 681 | +3.5 | 10.0 | 3.5 |
| first filed | 642 | −3.5 | 10.1 | 3.2 |
| Pre-tax income ($M) | 26.9 |
| Net income ($M) four quarters: 56.0 | 17.1 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +0.6 |
| Operating cash flow ($M) | 170 |
| Capital spending ($M) | 53.7 |
| Free cash flow ($M) | 117 |
| Cash and short-term investments ($M) | 291 |
| Debt ($M) long-term debt | 158 |
| Net cash, cash less debt ($M) | 133 |
| Deferred revenue ($M) −0.4% on a year | 124 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 435 |
| Inventory ($M) | 634 |
| Shareholders' equity ($M) | 1,129 |
| Market value ($M) | 2,254 |
| Enterprise value, market value plus net debt ($M) | 2,122 |
| Enterprise value to sales (×) | 0.7 |
| Enterprise value to operating income (×) | 20.6 |
| Price to earnings (×) | 40.2 |
| Price to book value (×) | 2.0 |
| Free-cash-flow yield (%) | 5.2 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.7% of shares outstanding sold short, 4.1 days of average trading to cover, −6.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $12.9M |
The thesis
Benchmark Electronics' shares are more likely to lag the S&P 500 over the next three months. They closed at $64.81 on 12 November 2026, down 20.6% in three months, after a quarter that beat guidance and an outlook that was raised. The fourth-quarter 2026 report, expected in early 2027, settles whether revenue reaches the $815–855 million guided range.
Benchmark reported third-quarter 2026 revenue of $811 million, up 19% from a year earlier, and non-GAAP (adjusted) diluted earnings per share of $0.84, up 35% (results release, 28 October 2026). It guided fourth-quarter revenue to $815–855 million and adjusted earnings per share to $0.85–0.91, and raised its 2026 revenue growth outlook to about 16%.
The price has moved the other way. The shares closed at $81.75 on 14 August 2026 and at $64.81 on 12 November 2026, and the 52-week high is $100.41 (intraday, 30 June 2026). The last close is 35.5% below that high and under both the 50-day average of $74.21 and the 200-day average of $73.09 (adjusted daily closes). Company news between the 28 October 2026 report and 12 November 2026 holds no guidance cut or results revision. Its one item is the 2 November 2026 production expansion for Oxide Computer Company.
The market has priced a lower value for the shares than the August level while the company's 2026 outlook went up. That gap is what the early-2027 report has to close.
Bullish and bearish views on Benchmark Electronics
The bull case on Benchmark Electronics (BHE), in brief: results beat the top of guidance. The bear case: the price rejected a beat and raise.
Bull case
- Results beat the top of guidance. Third-quarter revenue of $811 million exceeded the $795 million upper end of the guide, and adjusted earnings per share of $0.84 exceeded the $0.82 upper end (results release, 28 October 2026).
- Fourth-quarter guide sits above prior expectations. Benchmark guided revenue to $815–855 million and adjusted earnings per share to $0.85–0.91. Analysts had expected $796.3 million and $0.83 before the release (StockStory, 28 October 2026).
- Advanced computing keeps growing. Advanced Computing & Communications revenue was $132 million in the third quarter against $88 million a year earlier. Semiconductor-capital-equipment ("Semi-Cap") was the largest sector at $241 million (results release, 28 October 2026).
- A second U.S. site for Oxide. Benchmark announced on 2 November 2026 that it expanded production for Oxide Computer Company, a maker of on-premises rack-scale cloud systems, to a second U.S. site (Benchmark release, 2 November 2026).
- Balance sheet improved. Long-term debt was $154.1 million and cash $290.7 million at 30 September 2026, against debt of $206.8 million at year-end 2025 (results release, 28 October 2026).
- Insiders have not sold in the open market. The latest Form 4 filings record shares withheld for taxes: 2,204 shares by the chief financial officer at $74.37 on 14 October 2026, and withholding by the chief executive and chief operating officer on 17 August 2026.
Bear case
- The price rejected a beat and raise. StockStory reported a 2.7% fall to $71.38 right after the 28 October 2026 release. The shares then closed at $59.34 on 5 November 2026, before recovering to $64.81 on 12 November 2026.
- Margins are thin. The non-GAAP gross margin was 10.5% in the third quarter of 2026, so a small change in program mix moves earnings far more than revenue (results release, 28 October 2026).
- Aerospace and defense is flat. Revenue was $128 million against $129 million a year earlier (results release, 28 October 2026).
- Cash generation was modest. Third-quarter operating cash flow was $30 million and free cash flow $14 million. Cash fell from $322.1 million at year-end 2025 to $290.7 million at 30 September 2026.
- No cause for the decline is in company news. The shares fell from $81.75 on 14 August 2026 to $64.81 on 12 November 2026 with no guidance cut, which leaves sector sentiment or customer-spending concerns as unconfirmed explanations.
- Oxide terms are undisclosed. Evertiq reported on 3 November 2026 that Benchmark gave no site location, capacity figure or hiring detail for the expansion.
Price setup
The last close was $64.81 on 12 November 2026. That is 35.5% below the quoted 52-week high of $100.41 (30 June 2026) and well above the 52-week closing low of $42.15 (20 November 2025).
The shares sit below both the 50-day average of $74.21 and the 200-day average of $73.09 (adjusted closes, 12 November 2026). The 50-day average has crossed above the 200-day average, but the price is under both. The three-month change is –20.6%.
The recent closing range is narrow: $59.34 on 5 November 2026, $60.40 on 6 November 2026, $63.32 on 9 November 2026, $63.64 on 10 November 2026, $64.98 on 11 November 2026 and $64.81 on 12 November 2026. The lows of that run mark the nearest prior closing levels below the market.
Catalysts ahead
- ~30 November 2026 (est.): Quarterly dividend declaration. Benchmark paid $0.17 per share on 13 October 2026; the next declaration shows whether the payout holds.
- ~February 2027 (est.): Fourth-quarter and full-year 2026 results. Tests the guided fourth-quarter revenue range of $815–855 million and adjusted earnings per share of $0.85–0.91.
What would change the view
A daily close above $74.32, which sits just over the 50-day average of closes and would show the shares leading the S&P 500 again; fourth-quarter 2026 revenue above the $855 million top of the guide would also show that.
What it trades with
Benchmark is a contract manufacturer. Its largest sector is Semi-Cap at $241 million of third-quarter 2026 revenue, followed by Industrial at $172 million and Medical at $138 million. Its shares have tended to move with sentiment toward AI hardware and chip-equipment makers. Benchmark does not disclose revenue by customer, so a slowdown at an equipment maker or AI-hardware builder would appear first in the segment totals.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $811 million, up 19% from a year earlier; non-GAAP diluted earnings per share was $0.84, up 35%; GAAP diluted earnings per share was $0.47. Benchmark Electronics third-quarter 2026 results release (SEC Form 8-K exhibit 99.1) · as of
- Fourth-quarter 2026 guidance: revenue $815–855 million, GAAP diluted earnings per share $0.58–0.64, non-GAAP diluted earnings per share $0.85–0.91; 2026 revenue growth outlook raised to about 16%. Benchmark Electronics third-quarter 2026 results release (SEC Form 8-K exhibit 99.1) · as of
- Third-quarter revenue by sector: Semi-Cap $241 million, Industrial $172 million, Medical $138 million, Advanced Computing & Communications $132 million (from $88 million a year earlier), Aerospace & Defense $128 million. Benchmark Electronics third-quarter 2026 results release (SEC Form 8-K exhibit 99.1) · as of
- Third-quarter non-GAAP gross margin was 10.5%; long-term debt was $154.1 million and cash $290.7 million at 30 September 2026. Benchmark Electronics third-quarter 2026 results release (SEC Form 8-K exhibit 99.1) · as of
- Analysts expected $775.5 million revenue and $0.79 adjusted earnings per share for the third quarter and $796.3 million and $0.83 for the fourth quarter before the release; shares fell 2.7% to $71.38 right after it. StockStory via TradingView News · as of
- Benchmark expanded production for Oxide Computer Company to a second U.S. site; no location, capacity or hiring detail was given. Benchmark press release 2 November 2026; Evertiq 3 November 2026 · as of
- The chief financial officer had 2,204 shares withheld for taxes at $74.37 on 14 October 2026. SEC Form 4 filed 15 October 2026 · as of
- Closed at $64.81 on 12 November 2026, 35.5% below the quoted 52-week high of $100.41 (30 June 2026); three-month change –20.6%. Split-adjusted daily closes · as of
Sources
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