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) spiked by 11% this morning after the electronics manufacturing services specialist's quarterly results and outlook topped Wall Street expectations.
So what: Sanmina shares have soared over the past year on a string of market-topping quarters, and today's strong third-quarter results -- adjusted earnings per share increased 32.5% on revenue growth of 7.4% -- coupled with upbeat guidance only reinforce that positive trend. In fact, Sanmina generated about $152 million in operating cash flow while its non-generally accepted accounting principles operating margin increased 50 basis points year over year to 3.8%, suggesting that its competitive position continues to strengthen rapidly as well.
Now what: Management now sees fourth-quarter EPS of $0.50-$0.55 on revenue of $1.6 billion-$1.65 billion, versus the consensus of $0.51 and $1.58 billion, respectively. "Our investments in leading technology and capabilities offer differentiation in the market and value for our customers," said Chairman and CEO Jure Sola in a press release. "We continue to benefit from new programs and stable demand with key customers. Our previous expectation of modest growth in fiscal 2014 is achievable and solid execution of our strategy supports a promising future." When you couple Sanmina's still-hefty debt load with its red-hot and highly volatile stock price, however, I'd hold out for a much wider margin of safety before betting too heavily on that bullishness.