Sanmina Corp Stock Upgraded (SANM)
Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model .
NEW YORK ( TheStreet) -- Sanmina (SANM"> SANM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, attractive valuation levels, impressive record of earnings per share growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 1572.6% when compared to the same quarter one year prior, rising from -$1.44 million to $21.19 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, SANMINA CORP's return on equity exceeds that of both the industry average and the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.8%. Since the same quarter one year prior, revenues slightly dropped by 2.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- SANMINA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SANMINA CORP increased its bottom line by earning $2.15 versus $0.83 in the prior year. For the next year, the market is expecting a contraction of 37.7% in earnings ($1.34 versus $2.15).
Sanmina Corporation provides integrated electronics manufacturing services worldwide. The company has a P/E ratio of 5.2, below the S&P 500 P/E ratio of 17.7. Sanmina has a market cap of $882.1 million and is part of the technology sector and electronics industry. Shares are down 3.4% year to date as of the close of trading on Tuesday.