Sanmina-Sci (SANM) AI Stock Analysis

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Sanmina-Sci

(NASDAQ:SANM)

74Outperform

Sanmina demonstrates strong financial performance and positive earnings guidance, supported by solid revenue growth and strategic initiatives. Technical analysis suggests a cautious approach due to slightly bearish momentum. Valuation metrics indicate that the stock is reasonably priced, making it an attractive option for growth-focused investors despite the absence of dividends.

Positive Factors

Share Buybacks

The board authorized a new $300 million share buyback.

Telecom Market Recovery

SANM should benefit on the Telecom side as networking comes out of an inventory correction.

Negative Factors

Revenue Decline

Sanmina’s Cloud infrastructure revenues declined 21% year-over-year to $1.1bn, while revenues in Communications Networks declined 29% year-over-year.

Revenue Guidance

Revenue guidance for F1Q25 of $1.975bn was lower than Street at $2.0bn.

Sanmina-Sci (SANM) vs. S&P 500 (SPY)

Market Cap

$4.23B

Dividend YieldN/A

Average Volume (3M)420.38K

Price to Earnings (P/E)19.0

Beta (1Y)1.40

Revenue Growth-8.92%

EPS Growth-12.11%

CountryUS

Employees32,000

SectorTechnology

Sector Strength40

IndustryHardware, Equipment & Parts

Share Statistics

EPS (TTM)4.09

Shares Outstanding54,325,317

10 Day Avg. Volume469,183

30 Day Avg. Volume420,384

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.55

Price to Cash Flow (P/CF)16.60

P/FCF Ratio22.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$91.00

Price Target Upside21.92% Upside

Rating ConsensusHold

Number of Analyst Covering3

Sanmina-Sci Business Overview & Revenue Model

Company DescriptionSanmina Corporation, operating under the ticker symbol SANM, is a leading integrated manufacturing solutions provider serving the global electronics manufacturing services (EMS) market. The company specializes in providing end-to-end design, engineering, and manufacturing solutions primarily for the communications networks, computing and storage, medical, defense and aerospace, industrial and semiconductor, and automotive sectors. With a comprehensive suite of services, Sanmina supports its customers from initial product concept through final production and logistics.

How the Company Makes MoneySanmina makes money by offering a broad range of electronic manufacturing services, including product design, engineering, prototyping, supply chain management, and final assembly. The company's revenue streams are diversified across various sectors, with significant contributions from communications networks, computing and storage, and other high-tech industries. Sanmina's business model relies on long-term contracts with major corporations, leveraging its global manufacturing footprint to provide cost-effective and scalable solutions. Additionally, strategic partnerships and its ability to adapt to the technological needs of its clients play a crucial role in sustaining and growing its revenue base.

Sanmina-Sci Financial Statement Overview

Summary

Sanmina-Sci's financial statements indicate robust profitability with a stable gross profit margin and net profit margin. The balance sheet is strong with a healthy equity ratio and low debt-to-equity ratio. However, there are opportunities to enhance operational margins and cash flow efficiency.

Income Statement

Positive

Sanmina-Sci shows strong profitability with a stable gross profit margin and net profit margin over the TTM period. The revenue growth rate is moderate, indicating steady business expansion. However, there is a slight decline in EBIT and EBITDA margins, which may suggest rising operational costs or competitive pressures.

Balance Sheet

Positive

The company's balance sheet exhibits a healthy equity ratio, indicating a strong equity base relative to total assets. The debt-to-equity ratio is low, reflecting prudent financial management and low leverage. Return on equity remains solid, demonstrating efficient use of shareholder funds.

Cash Flow

Positive

Cash flow analysis reveals a positive free cash flow trajectory, although growth has been inconsistent. The operating cash flow to net income ratio highlights operational efficiency. However, the free cash flow to net income ratio could be improved to strengthen the company's cash position.

TTM	Sep 2024	Sep 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
7.70B	7.57B	8.94B	7.89B	6.76B	6.96B
	Gross Profit
647.50M	640.43M	743.21M	640.51M	551.80M	525.71M
	EBIT
341.60M	335.49M	455.66M	367.79M	281.30M	227.69M
	EBITDA
470.03M	469.14M	579.95M	463.08M	380.65M	366.75M
	Net Income Common Stockholders
230.47M	222.54M	309.97M	240.38M	249.55M	133.17M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
592.81M	625.86M	667.57M	529.86M	650.03M	480.53M
	Total Assets
3.30B	4.82B	4.87B	4.86B	4.21B	3.77B
	Total Debt
1.31B	317.32M	338.27M	346.74M	330.32M	348.00M
	Net Debt
712.85M	-308.54M	-329.30M	-183.12M	-319.70M	-132.53M
	Total Liabilities
2.64B	2.46B	2.56B	3.00B	2.33B	2.14B
	Stockholders Equity
661.60M	2.20B	2.32B	1.86B	1.88B	1.63B
Cash Flow		Free Cash Flow
186.06M	228.99M	45.21M	200.64M	266.13M	236.15M
	Operating Cash Flow
278.13M	340.22M	235.17M	330.85M	338.34M	300.56M
	Investing Cash Flow
-96.80M	-114.40M	-192.46M	-132.21M	-91.33M	-64.41M
	Financing Cash Flow
-170.10M	-269.71M	94.50M	-314.30M	-77.32M	-210.28M

Sanmina-Sci Technical Analysis

Technical Analysis Sentiment

Positive

Last Price74.64

Price Trends

50DMA

80.34

Negative

100DMA

79.71

Negative

200DMA

74.52

Positive

Market Momentum

MACD

-1.08

Negative

RSI

41.32

Neutral

STOCH

26.53

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SANM, the sentiment is Positive. The current price of 74.64 is below the 20-day moving average (MA) of 75.68, below the 50-day MA of 80.34, and above the 200-day MA of 74.52, indicating a neutral trend. The MACD of -1.08 indicates Negative momentum. The RSI at 41.32 is Neutral, neither overbought nor oversold. The STOCH value of 26.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SANM.

Sanmina-Sci Risk Analysis

Sanmina-Sci disclosed 30 risk factors in its most recent earnings report. Sanmina-Sci reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Sanmina-Sci Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ESE	80 Outperform	$3.92B	35.63	9.22%	0.23%	8.94%	18.56%
OSIS	75 Outperform	$3.21B	24.58	16.85%	―	20.69%	17.89%
SANM	74 Outperform	$4.23B	19.02	10.55%	―	-8.92%	-12.11%
PLXS	73 Outperform	$3.37B	27.63	9.27%	―	-3.53%	-3.90%
MKSI	68 Neutral	$4.94B	26.04	7.93%	1.50%	-0.99%	―
CGNX	66 Neutral	$4.37B	41.91	7.03%	1.33%	9.19%	-5.77%
Sector *	57 Neutral	$20.31B	10.03	-14.49%	2.79%	5.15%	-23.76%

* Technology Sector Average

Performance Comparison

SANM

Sanmina-Sci

74.64

15.45

26.10%

CGNX

Cognex

23.45

-17.53

-42.78%

ESE

Esco Technologies

147.00

43.47

41.99%

MKSI

MKS Instruments

64.24

-62.15

-49.17%

OSIS

OSI Systems

184.44

46.43

33.64%

PLXS

Plexus

119.18

22.00

22.64%

Sanmina-Sci Earnings Call Summary

Earnings Call Date: Jan 27, 2025 | % Change Since: -4.93% | Next Earnings Date: May 5, 2025

Earnings Call Sentiment Positive

Sanmina delivered a strong first quarter performance with significant revenue growth driven by the communications networks and cloud infrastructure segments. The company maintained a robust balance sheet and demonstrated effective cash flow management, allowing for strategic investments and shareholder returns. However, challenges remain in managing CPS segment margins and operating expenses. Overall, the positive aspects of revenue growth, financial performance, and strategic initiatives outweigh the challenges faced.

Highlights

Solid Revenue Growth

Sanmina achieved a revenue of $2.01 billion for the first quarter of fiscal year 2025, which represents a 7.0% increase compared to the same period a year ago.

Strong Performance in Communications Networks and Cloud Infrastructure

The communications networks and cloud infrastructure end-markets grew by 19% year-over-year, contributing significantly to the overall revenue growth.

Improvement in Non-GAAP Financial Metrics

Non-GAAP gross margin improved to 9.0%, and non-GAAP diluted earnings per share increased by 10.8% compared to the same period a year ago.

Robust Balance Sheet

Sanmina ended the quarter with $642 million in cash and no outstanding borrowings, providing substantial liquidity of approximately $1.5 billion.

Strong Free Cash Flow

The company reported a free cash flow of $47 million for the quarter, enabling continued investment in business growth and shareholder returns.

Share Repurchase Authorization

Sanmina's Board of Directors authorized an additional $300 million for share repurchases, reflecting confidence in the company's valuation and future prospects.

Lowlights

Pressure on CPS Segment Gross Margin

The CPS segment experienced a gross margin decline of 40 basis points year-over-year, driven by unfavorable mix.

Slight Increase in Operating Expenses

Non-GAAP operating expenses were $67.4 million, slightly above the company's outlook due to targeted investments for future growth.

Inventory Management Challenges

Although inventory reduced by approximately 5% year-over-year, further improvements are needed to align with historical levels.

Company Guidance

During Sanmina's First Quarter Fiscal 2025 earnings call, the company provided robust guidance and performance metrics. They reported a revenue of $2.01 billion, which was a 7.0% increase compared to the same period a year ago. Their non-GAAP operating margin reached 5.6%, while the non-GAAP gross margin was 9.0%, both exceeding their outlook. The non-GAAP earnings per share were $1.44, reflecting a 10.8% increase from the prior year, or 16.2% when normalized for tax rate changes. The company highlighted significant growth in the communications networks and cloud infrastructure end-markets, with a year-over-year increase of 19%. For the second quarter, Sanmina expects revenue between $1.9 billion and $2.0 billion, a non-GAAP gross margin of 8.4% to 8.8%, and non-GAAP EPS in the range of $1.30 to $1.40. Additionally, they announced a $300 million share repurchase authorization, emphasizing their strategy of disciplined capital allocation to maximize shareholder value.

Sanmina-Sci Corporate Events

Executive/Board ChangesShareholder Meetings

Sanmina-Sci Appoints Michael Loparco to Board

Neutral

Mar 14, 2025

On March 10, 2025, Sanmina Corporation appointed Michael J. Loparco to its Board of Directors. Loparco, with over 25 years of experience in global manufacturing and leadership roles at Symbotic Inc. and Jabil Inc., is expected to bring valuable insights to Sanmina’s operations. Additionally, the company’s stockholders approved an amendment to the 2019 Equity Incentive Plan to reserve an additional 1,000,000 shares of Common Stock, which aims to enhance the company’s incentive structures for eligible individuals.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.