Breaking Down Sanmina Corporation (SANM) Financial Health: Key Insights for Investors

Are you keeping a close watch on Sanmina Corporation (SANM) and wondering about its financial stability? With a fiscal year 2024 revenue of $7.57 billion and a GAAP operating margin of 4.4%, how does Sanmina truly measure up? Did you know that Sanmina actively repurchased approximately 4.0 million of its shares for $227 million in fiscal year 2024, reflecting their commitment to return value to shareholders? Let's delve into the key financial insights that can help you make informed decisions.

Sanmina Corporation (SANM) Revenue Analysis

Understanding Sanmina Corporation's (SANM) financial health involves a detailed examination of its revenue streams. A comprehensive analysis includes identifying primary revenue sources, evaluating year-over-year growth, understanding the contributions from different business segments, and recognizing significant changes in revenue composition.

For the fiscal year 2024, which ended on September 28, 2024, Sanmina reported a revenue of $7.57 billion. This figure represents a 15.30% decrease compared to the $8.94 billion in revenue reported for fiscal year 2023. However, the first quarter of fiscal year 2025 shows a positive trend, with revenue of $2.01 billion, a 7.02% growth. The company's revenue in the last twelve months is $7.70 billion.

Sanmina manages its operations through two main business segments:

• Integrated Manufacturing Solutions (IMS): This segment includes printed circuit board assembly and test, high-level assembly and test, and direct-order-fulfillment. In 2024, IMS generated approximately 80% of Sanmina's total revenue.
• Components, Products, and Services (CPS): This segment includes printed circuit boards, backplanes, cable assemblies, fabricated metal parts, and various products and services.

Here's a historical overview of Sanmina's revenue:

Sanmina serves various industries, including industrial, medical, defense and aerospace, automotive, communications networks, and cloud infrastructure. Recent growth has been observed in communications networks and cloud infrastructure.

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Sanmina Corporation (SANM) Profitability Metrics

Sanmina Corporation's profitability can be evaluated through its gross profit, operating profit, and net profit margins. These metrics reveal how efficiently the company converts revenue into profit at different stages. Analyzing these margins over time helps identify trends and areas of improvement.

In the fiscal year 2024, Sanmina Corporation reported a gross profit of $832.4 million. The gross profit margin, calculated as gross profit divided by total revenue, stood at 9.4%. This indicates the percentage of revenue remaining after deducting the cost of goods sold. For the same period, the operating income was $336.4 million, resulting in an operating margin of 3.8%. This margin reflects the company's earnings before interest and taxes (EBIT) as a percentage of revenue. The net income for fiscal year 2024 was $244.1 million, translating to a net profit margin of 2.8%. This represents the percentage of revenue that remains after all expenses, including taxes and interest, are accounted for.

Here's a summary of Sanmina Corporation's profitability metrics for fiscal year 2024:

When comparing Sanmina Corporation's profitability ratios with industry averages, it's essential to consider the specific sector in which it operates—electronics manufacturing services (EMS). Industry averages can vary widely, but generally, a healthy gross margin for EMS companies is around 10% to 15%, an operating margin between 3% to 5%, and a net profit margin of 2% to 4%. Comparing Sanmina Corporation's ratios to these benchmarks provides insights into its relative performance and efficiency.

Analysis of operational efficiency involves examining cost management and gross margin trends. Effective cost management directly impacts the gross margin. For example, improvements in supply chain management, production processes, and overhead control can enhance the gross margin. Additionally, monitoring gross margin trends over several periods can reveal whether these efficiencies are improving or declining.

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Sanmina Corporation (SANM) Debt vs. Equity Structure

Understanding how Sanmina Corporation (SANM) finances its operations and growth is crucial for investors. This involves analyzing the company's debt levels, its debt-to-equity ratio, and how it strategically uses debt and equity to fund its activities. Here’s a detailed look at Sanmina's approach to balancing debt and equity.

As of the fourth quarter of fiscal year 2024, Sanmina Corporation's total debt stood at $740.6 million. This includes both short-term and long-term obligations, reflecting the company's financing strategy to support its operations and strategic initiatives.

Here’s a breakdown of Sanmina Corporation's debt components:

• Total Current Liabilities: $1.35 billion as of June 29, 2024, compared to $1.27 billion on July 1, 2023.
• Long-Term Debt: $681.10 million as of June 29, 2024.

The debt-to-equity (D/E) ratio is a key metric used to assess a company's financial leverage. It indicates how much debt a company is using to finance its assets relative to the value of shareholders' equity. As of June 2024, Sanmina's debt-to-equity ratio is approximately 0.54.

A debt-to-equity ratio of 0.54 suggests that Sanmina finances a significant portion of its assets through equity, indicating a relatively conservative approach to leverage. Compared to industry standards, this ratio positions Sanmina as moderately leveraged. The electronics manufacturing services (EMS) industry can vary widely, but a D/E ratio below 1.0 is generally considered healthy, suggesting a balance between debt and equity financing.

Recent financial activities provide insights into Sanmina's debt management:

• In Q4 2024, Sanmina repurchased $75 million of shares.
• The company's cash and cash equivalents were reported at $444.9 million as of June 29, 2024.
• Sanmina's ability to generate cash from operations is vital for servicing its debt. In fiscal year 2024, the company generated $337.9 million in cash from operating activities.

Balancing debt and equity is a strategic decision for Sanmina. Debt financing can provide capital for growth and operational investments, while equity funding ensures long-term financial stability. Sanmina's approach involves:

• Maintaining a manageable debt level to avoid excessive interest expenses.
• Utilizing equity to fund strategic initiatives and growth opportunities.
• Optimizing the capital structure to enhance shareholder value.

Here is an overview of Sanmina's financial data:

For more insights into Sanmina's corporate values and strategic direction, explore Mission Statement, Vision, & Core Values of Sanmina Corporation (SANM).

Sanmina Corporation (SANM) Liquidity and Solvency

A crucial aspect of evaluating Sanmina Corporation's (SANM) financial health involves assessing its liquidity, which indicates its ability to meet short-term obligations. Key metrics for this assessment include the current and quick ratios, working capital trends, and cash flow statements.

The current ratio, calculated by dividing current assets by current liabilities, provides insights into SANM's ability to cover its short-term liabilities with its short-term assets. Similarly, the quick ratio, which excludes inventories from current assets, offers a more conservative view of immediate liquidity. Analysis of these ratios over time can reveal trends in SANM's liquidity position.

Working capital, defined as the difference between current assets and current liabilities, is another critical indicator. Monitoring trends in SANM's working capital can highlight potential liquidity issues or improvements. A declining working capital balance may signal difficulties in meeting short-term obligations, while an increasing balance suggests enhanced liquidity.

Cash flow statements provide a comprehensive overview of SANM's cash inflows and outflows from operating, investing, and financing activities. Analyzing these cash flow trends can reveal the company's ability to generate cash from its core operations, manage its investments, and fund its financing activities. Positive operating cash flow is particularly important as it indicates SANM's ability to sustain its operations and meet its obligations without relying on external funding.

Here's a breakdown of what these cash flow activities generally entail:

• Operating Activities: Cash generated from the company's core business operations.
• Investing Activities: Cash flow related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Activities: Cash flow related to debt, equity, and dividends.

While specific 2024 fiscal year data is needed to provide precise figures and analysis, monitoring these liquidity indicators is essential for investors to gauge Sanmina Corporation's short-term financial health and identify any potential liquidity concerns or strengths. Investors should examine these metrics in conjunction with industry benchmarks and competitor data to gain a more comprehensive understanding of SANM's liquidity position.

For more insights into Sanmina Corporation's values, review the Mission Statement, Vision, & Core Values of Sanmina Corporation (SANM).

Sanmina Corporation (SANM) Valuation Analysis

To assess whether Sanmina Corporation (SANM) is overvalued or undervalued, several key financial metrics and analyses can be considered. Here's a breakdown:

• Access more insights on Sanmina Corporation (SANM)'s financial health: Breaking Down Sanmina Corporation (SANM) Financial Health: Key Insights for Investors

Valuation Ratios:

• Price-to-Earnings (P/E) Ratio:
• The trailing P/E ratio is 18.34.
• The forward P/E ratio is 11.86.
• Price-to-Book (P/B) Ratio:
• The current P/B ratio is approximately 1.79 - 1.90 as of March 2025.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio:
• The EV/EBITDA ratio is 8.10.

Stock Price Trends:

• Over the last 52 weeks, the stock price has increased by approximately +29.44%.
• The 52-week high is $91.12.
• The 52-week low is $57.52.
• As of April 17, 2025, the closing stock price is $74.92.

Dividend Yield and Payout Ratios:

• The current dividend yield is 0.00%.
• The TTM (Trailing Twelve Months) dividend payout as of January 31, 2025, is $0.00.

Analyst Consensus:

• The analyst rating consensus is 'Hold'.
• The average 12-month price target is $91.00, based on recent analyst ratings.
• Fintel price targets are generated from a collection of forecasts made by different analysts. We provide the high, low, average, and median values for the stock.

Additional Financial Metrics:

Based on these metrics, Sanmina's valuation can be further contextualized by comparing it to industry peers and historical data. For instance, the forward P/E of 11.86 suggests potential undervaluation if earnings are expected to grow. The P/B ratio indicates how the market values the company’s net assets. The EV/EBITDA ratio is a useful measure for valuation, taking into account both debt and equity.

Keep in mind that these are snapshots in time and the market is constantly reevaluating these numbers.

Sanmina Corporation (SANM) Risk Factors

Sanmina Corporation (SANM) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges highlighted in the company's filings.

Here's a breakdown of some key risk areas:

• Industry Competition: The electronics manufacturing services (EMS) industry is highly competitive. Sanmina competes with numerous global and regional players, some of which may have greater financial and technical resources. Increased competition could lead to pricing pressures, reduced profit margins, and loss of market share.
• Regulatory Changes: Sanmina's global operations expose it to various regulatory environments. Changes in laws and regulations, including those related to trade, tariffs, environmental compliance, and data privacy, could increase compliance costs, disrupt operations, and adversely affect financial performance.
• Market Conditions: Economic downturns, fluctuations in demand for electronic products, and geopolitical instability can all impact Sanmina's business. A decrease in demand from key customers or industries could lead to lower revenues and profitability.

Operational, financial, and strategic risks are often detailed in Sanmina's annual reports and other filings with the Securities and Exchange Commission (SEC). These risks can include:

• Supply Chain Disruptions: Dependence on a global supply chain exposes Sanmina to risks such as material shortages, price increases, and disruptions caused by natural disasters, political instability, or pandemics.
• Technological Obsolescence: The rapid pace of technological change in the electronics industry requires continuous investment in new equipment and processes. Failure to adapt to new technologies could render Sanmina's services less competitive.
• Customer Concentration: A significant portion of Sanmina's revenue may come from a limited number of customers. The loss of a major customer or a significant reduction in their orders could have a material adverse effect on Sanmina's financial results.
• Cybersecurity Threats: Sanmina, like other companies, faces ongoing cybersecurity threats that could compromise sensitive data, disrupt operations, and harm its reputation.

Mitigation strategies, when available, typically involve:

• Diversification: Efforts to diversify the customer base and expand into new markets can reduce reliance on specific customers or regions.
• Operational Efficiencies: Implementing lean manufacturing principles, investing in automation, and optimizing supply chain management can improve efficiency and reduce costs.
• Risk Management Programs: Establishing comprehensive risk management programs to identify, assess, and mitigate potential risks.
• Compliance Programs: Maintaining robust compliance programs to ensure adherence to all applicable laws and regulations.

Investors can find detailed discussions of these and other risks in Sanmina's annual reports on Form 10-K and quarterly reports on Form 10-Q, filed with the SEC. Reviewing these filings is essential for understanding the full scope of risks facing the company.

To gain further insights into Sanmina Corporation's financial health, consider exploring: Breaking Down Sanmina Corporation (SANM) Financial Health: Key Insights for Investors

Sanmina Corporation (SANM) Growth Opportunities

Sanmina Corporation (SANM) is strategically positioned to capitalize on several key growth drivers. These include product innovations, market expansions, strategic acquisitions, and key partnerships, setting the stage for future revenue growth and enhanced earnings potential. Let's delve into the specifics:

Key Growth Drivers:

• Product Innovations: Sanmina's commitment to innovation in manufacturing and technology solutions allows them to capture emerging market demands and maintain a competitive edge.
• Market Expansions: Expanding into new geographic regions and vertical markets diversifies Sanmina's revenue streams, mitigating risks associated with over-reliance on specific sectors.
• Acquisitions: Strategic acquisitions enable Sanmina to enhance its capabilities, broaden its service offerings, and penetrate new markets, contributing to overall growth.

Future Revenue Growth Projections and Earnings Estimates:

While specific revenue growth projections and earnings estimates can fluctuate based on market conditions and internal strategies, several factors suggest a positive outlook for Sanmina. For example, Sanmina reported total revenue of $7.43 billion for the fiscal year 2024. The company's ability to secure new contracts and expand existing relationships with key clients will be crucial in achieving sustained revenue growth.

Strategic Initiatives and Partnerships:

• Partnerships: Forming strategic alliances with technology providers and industry leaders enhances Sanmina's ability to deliver comprehensive solutions and expand its market reach.
• New Technologies: Investment in new technologies will allow Sanmina to offer new services.

Competitive Advantages:

Sanmina possesses several competitive advantages that position it favorably for future growth:

• Global Footprint: With manufacturing facilities and service centers strategically located around the world, Sanmina can efficiently serve its global customer base.
• Diverse Service Offerings: Sanmina's comprehensive suite of services, including design and engineering, manufacturing, and supply chain management, provides a one-stop solution for its clients.
• Strong Customer Relationships: Sanmina's long-standing relationships with blue-chip clients across various industries provide a stable revenue base and opportunities for expansion.

A SWOT analysis can further illuminate Sanmina's growth prospects:

For more insights into Sanmina Corporation and its investors, check out: Exploring Sanmina Corporation (SANM) Investor Profile: Who’s Buying and Why?