Sanmina has been on fire lately. In the past six months alone, the company’s stock price has rocketed 43.1%, reaching $203.68 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now still a good time to buy SANM? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive on Sanmina?
Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Sanmina’s sales grew at an excellent 12.8% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers.
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Sanmina’s revenue to rise by 17.5%. While this projection is below its 29.6% annualized growth rate for the past two years, it is eye-popping for a company of its scale and suggests the market is forecasting success for its products and services.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sanmina’s EPS grew at 20.6% compounded annual growth rate over the last five years, higher than its 12.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why we’re bullish on Sanmina, and with the recent surge, the stock trades at 15.8× forward P/E (or $203.68 per share). Is now a good time to buy despite the apparent froth? See for yourself in our comprehensive research report, it’s free.
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