SANM Rises 26.4% in the Past 6 Months: Should You Buy the Stock?

Core Insights - Sanmina Corporation (SANM) has experienced a 26.4% increase in stock price over the past six months, outperforming the S&P 500 but lagging behind the Electronic Manufacturing Services industry's growth of 32.3% [1][9] - The company has outperformed Jabil, Inc. (JBL) but underperformed Celestica, Inc. (CLS), with Celestica showing a 38.9% increase and JBL a 6.9% increase [2] Financial Performance - In Q4 2025, Integrated Manufacturing Solutions (IMS) revenues surged 72% year over year to $2.79 billion, with a non-GAAP gross margin increase of 8.7% [4] - The Components, Products and Services (CPS) business saw a 4.33% year-over-year increase to $434 million, with a non-GAAP gross margin of 12.9% [5] - Non-GAAP operating profit increased by 40 basis points year over year due to reduced operating expenses as a percentage of revenues [6] Cash Flow and Liquidity - In Q1 fiscal 2026, Sanmina generated $178.7 million in net cash from operating activities, up from $63.9 million in the same quarter last year, with free cash flow reaching $92 million [7][9] - The current ratio at the end of Q1 fiscal 2026 was 1.70, indicating a strong position to meet short-term debt obligations [11] Growth Prospects - The company is focusing on investments in capacity and technology improvements across operations in the U.S., India, and Mexico, enhancing its competitive position in the electronics manufacturing services industry [10] - Earnings estimates for 2025 have risen by 4.36% to $10.06 per share, while estimates for 2026 have increased by 5.67% to $12.11, reflecting bullish sentiment [12] Valuation Metrics - Sanmina's shares trade at a forward price/earnings ratio of 13.52, which is lower than the industry average of 24.12 and its historical mean of 17.32, indicating a relatively attractive valuation [13] Overall Outlook - The company is benefiting from strong momentum in various end markets, with efficient capital management allowing for continued investment in growth initiatives [15]