What a fantastic six months it’s been for Sanmina. Shares of the company have skyrocketed 67.8%, hitting $243.24. This was partly due 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 Is Sanmina a Good Business?
Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
1. Long-Term Revenue Growth Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Sanmina grew its sales at a solid 10.2% compounded annual growth rate. Its growth beat 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 29.3%, an improvement versus its 10.2% annualized growth for the past five years. This projection is eye-popping for a company of its scale and implies its newer products and services will spur better top-line performance.
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 17% compounded annual growth rate over the last five years, higher than its 10.2% 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 think Sanmina is a great business, and after the recent surge, the stock trades at 21.2× forward P/E (or $243.24 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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