Why Sanmina Shares Surged

Is Sanmina's pop meaningful or just another movement?

Jan 28, 2014 at 5:06PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sanmina (NASDAQ:SANM) soared more than 12% Tuesday after the integrated manufacturing solutions company reported solid fiscal first-quarter earnings.

So what: Though quarterly revenue fell almost 3% to $1.45 billion, adjusted earnings actually grew more than 40% to $0.41 per share. Analysts had expected earnings of just $0.38 per share on sales of $1.46 billion.

Now what: For the current quarter, Sanmina expects revenue between $1.425 billion and $1.475 billion, with adjusted earnings per diluted share between $0.36 and $0.42. Analysts are modeling current quarter sales of $1.45 billion and earnings of $0.39 per share.

Short of Sanmina's better-than-expected profitability -- which can be partially attributed to its share repurchase efforts -- there were no big surprises here. However, I'll admit the stock does look cheap trading about 9.4 times next year's estimated earnings.

This in mind, the company also noted it expects modest growth when all is said and done in 2014, and those earnings estimates are likely to rise once analysts have time to fully digest the numbers. As a result, I think Sanmina stock could still prove a bargain for investors even after today's pop.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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