Key Takeaways Sanmina delivers advanced automotive electronics, from ECUs to LED lighting and climate modules.The company supports EV growth with power management, battery subsystems and charging systems.Partnerships with OEMs like Ather Energy enhance Sanmina's role in smart and connected vehicles.Sanmina Corporation (SANM) is a key provider in the automotive electronics sector, delivering advanced designs, manufacturing, testing and supply chain solutions to global original equipment manufacturers (OEMs) ...

Industry Overview - The Zacks Automotive - Original Equipment industry involves the design, manufacture, and distribution of automotive equipment components essential for vehicle production, including drive axles, engine parts, and brakes [2] - Demand for original equipment is closely tied to vehicle sales, which depend on economic growth and consumer confidence [2] - Globalization is creating new opportunities for auto-equipment manufacturers, necessitating adaptation through research and development [2] Key Themes Defining the Industry's Fate - U.S. auto sales are projected to decline, with May 2025 sales estimated at 1.47 million units, leading to a seasonally adjusted annual rate of 15.7 million, down from 17.6 million in March and April [3] - The shift towards electric and autonomous vehicles is reshaping the industry, requiring component suppliers to innovate in areas like batteries and sensors [4] - Rising costs associated with R&D and production are critical challenges, necessitating effective cost management to protect margins [5] Current Industry Performance - The Zacks Automotive - Original Equipment industry ranks 146, placing it in the bottom 40% of approximately 250 Zacks industries, indicating weak near-term prospects [6][7] - The industry's earnings estimates have declined by 9% year-to-date, reflecting a negative outlook for earnings growth [8] - Over the past year, the industry has underperformed the broader Auto sector and the S&P 500, losing 10% compared to the sector's 15% and the S&P 500's 12% growth [9] Current Valuation - The industry is currently trading at an EV/EBITDA ratio of 18.43X, higher than the S&P 500's 16.65X but lower than the sector's 21.93X [12] - Historically, the industry has traded between 5.89X and 23.79X over the past five years, with a median of 13.50X [13] Stocks to Watch - **Strattec Security**: A key supplier of automotive access and security solutions, with strong demand and cost-cutting measures expected to save $5 million annually [17][18] - **Luminar Technologies**: Focused on LiDAR sensors for self-driving cars, with a new platform expected to launch in late 2026 or early 2027, and strong financial positioning with $400 million in liquidity [22][23] - **Allison Transmission**: Specializes in automatic transmissions for commercial trucks, benefiting from rising defense spending and strong demand in North America, with a recent 8% dividend increase [27][28]