Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors

You're looking at SigmaTron International, Inc. (SGMA) and seeing a mixed signal, and honestly, the headline numbers for the 2025 fiscal year are defintely a puzzle you need to solve before making a move. Here's the quick math: for the nine months ended January 31, 2025, the company's core revenue dropped 21 percent to $230.6 million, reflecting a clear market softness in their electronic manufacturing services (EMS) business. But then you see the third quarter net income jump to $3.9 million, which is a massive improvement from the prior year, but that profit was largely engineered by a one-time, non-operational $7.2 million gain from a sale/leaseback transaction. That's the real story-a struggling core business propped up by a strategic asset sale, all leading up to the ultimate action: the acquisition by Transom Capital, which completed in July 2025 with a tender offer price of $3.02 per share. The question now isn't just about past performance, but how the new ownership will manage the underlying revenue decline while integrating the business.

Revenue Analysis

You need to know where SigmaTron International, Inc. (SGMA) makes its money, especially with the recent revenue softness. The direct takeaway is that SigmaTron operates as a pure-play Electronic Manufacturing Services (EMS) provider, but its top-line revenue has been under significant pressure, dropping by over a fifth in the last year.

For the trailing twelve months (TTM) ending around November 2025, SigmaTron International, Inc.'s total revenue stood at approximately $311.71 million. This figure is critical because it reflects a substantial year-over-year decline of about -22.27%. That's a sharp contraction, and you can't ignore it.

Here's the quick math on the near-term trend: for the nine-month period ending January 31, 2025, revenues were $230.6 million, a 21% decrease from the same period in the prior year. The third fiscal quarter of 2025 alone saw revenues fall by 26% to just $71.1 million compared to the previous year. That's the kind of drop that forces management to make tough calls.

The company reports in one reportable segment: Electronic Manufacturing Services (EMS). That means 100% of its revenue comes from this single core business. To be fair, this EMS segment is diverse in its offerings, which include:

• Printed circuit board assemblies (PCBAs)
• Electro-mechanical subassemblies
• Completely assembled (box-build) electronic products

The revenue streams are geographically diverse, though, with manufacturing facilities spanning the US, Mexico, China, and Vietnam. This global footprint is key, but it also exposes the company to regional economic shifts. Management noted that the depressed revenue levels were expected to continue into the third quarter, partly due to the holiday season in North America and Asia, which shows how much their revenue is tied to global production schedules.

The significant change in the revenue stream isn't a shift in what they sell, but a sharp drop in how much they sell. The decline is attributed to a general softness in demand and broader economic challenges, including supply chain disruptions, which have been a headwind for the entire industry. Still, the CEO has expressed optimism for future growth based on current backlogs, so the key is watching if those backlogs convert to revenue in the coming quarters.

Here is a snapshot of the recent revenue performance:

If you want to dig deeper into who is betting on this turnaround, you should check out Exploring SigmaTron International, Inc. (SGMA) Investor Profile: Who's Buying and Why?

Profitability Metrics

You need a clear picture of SigmaTron International, Inc.'s (SGMA) core profitability, and the numbers for the Trailing Twelve Months (TTM) leading into fiscal year 2025 show a company struggling with operational efficiency. Simply put, the company is generating a gross profit but is losing money once operating expenses are factored in.

For the TTM period ending in early fiscal year 2025, SigmaTron International, Inc. reported a Gross Profit of approximately $23.13 million on revenue of $311.71 million. This translates to a Gross Profit Margin of 7.42%. This figure is at the lower end of the typical Electronic Manufacturing Services (EMS) sector, which is already a low-margin business, but it's the operational costs that are the real problem.

Here's the quick math on the key profitability ratios for the TTM period:

• Gross Profit Margin: 7.42%
• Operating Profit Margin: -0.80% (an Operating Loss)
• Net Profit Margin: -3.93% (a Net Loss)

The negative operating margin means that after paying for selling, general, and administrative (SG&A) expenses, the company is operating at a loss of about $2.50 million. This is a clear signal that cost management is not defintely keeping pace with the revenue decline.

Profitability Trends and Operational Efficiency

The trend in profitability for fiscal year 2025 is concerning, as it highlights a significant drop in revenue and a reliance on non-core income to mask the underlying operational loss. For the nine-month period ended January 31, 2025, revenues fell 21% to $230.6 million compared to the prior year, resulting in a net loss of $8.9 million.

To be fair, the third quarter did show a reported net income of $3.9 million. But what this estimate hides is that the profit was primarily driven by a one-time, non-operating gain of approximately $7.2 million from a sale/leaseback transaction. Strip that out, and the quarter was still operating at a loss.

The operational efficiency analysis points to a struggle with cost management, especially as revenue shrinks. The EMS industry is projected to grow at a Compound Annual Growth Rate (CAGR) of around 6.95% from 2025, driven by trends like EV electronics and industrial automation. SigmaTron International, Inc. is missing out on that growth, and its cost structure is too heavy for its current revenue base. The negative operating margin is the clearest evidence of this inefficiency, indicating that the cost of goods sold (COGS) and SG&A expenses are consuming more than 100% of the sales revenue.

SGMA vs. Industry Averages

SigmaTron International, Inc.'s margins are significantly below what is considered healthy for a stable EMS provider. While the industry is known for tight margins due to intense competition, a healthy peer typically maintains an operating margin in the low single digits (2% to 5%) and a net profit margin above 1%.

The negative margins for the TTM period put SigmaTron International, Inc. in a challenging position compared to its peers. The company is currently focused on restructuring efforts to right-size the organization, which is a necessary action to bring its operating expenses in line with its reduced revenue.

For a complete breakdown of the company's financial position, including a look at its balance sheet and cash flow, you can read the full post: Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors

Debt vs. Equity Structure

You're looking at SigmaTron International, Inc. (SGMA)'s balance sheet to understand how they fund their operations, and the picture for fiscal year 2025 was one of significant financial strain, which ultimately led to a major change. The company relied heavily on debt, and a high portion of that debt was considered a near-term risk, putting pressure on management to find a solution.

As of October 2024, SigmaTron International, Inc. carried total debt of approximately $62.5 million. That's a lot of borrowing for a company with a market capitalization that was sitting much lower. The non-current portion of the long-term debt was quite small, recorded at just over $2.61 million as of January 31, 2025. The problem wasn't the small long-term debt; it was the short-term pressure.

• Total Debt (Oct 2024): $62.5 million
• Stockholders' Equity (Jan 2025): $57.55 million
• Non-Current Long-Term Debt (Jan 2025): $2.61 million

Here's the quick math on the leverage: The Debt-to-Equity (D/E) ratio for SigmaTron International, Inc. was approximately 1.19 in the recent period leading up to the acquisition. This means the company had nearly $1.19 in debt for every $1.00 in shareholder equity. For context, the average D/E ratio for the Computer Hardware industry-a reasonable proxy for the capital-intensive Electronic Manufacturing Services (EMS) sector-is closer to 0.24. A ratio over 1.0 signals high leverage, and at 1.19, the company was defintely leaning on its lenders more than its shareholders to finance its assets.

The balance of debt financing versus equity funding was clearly tilted toward debt, and the situation was precarious. The company's total debt was reclassified as a current liability on the balance sheet as of April 30, 2025, because of covenant compliance failures and a lender demand for a 'Replacement Transaction' (refinancing) by September 2025. This reclassification is a critical signal to investors: a failure to refinance would have forced a default. In Q2 of fiscal 2025, the company recorded approximately $3.3 million in expenses tied directly to debt modification and financing costs, showing the immediate financial toll of managing this debt load.

The required refinancing was ultimately resolved by a major corporate action. In May 2025, Transom Capital Group, LLC announced an agreement to acquire SigmaTron International, Inc. in an all-cash tender offer valued at $83 million. This acquisition, which closed in July 2025, provided the necessary capital to address the debt obligation and ended the company's run as a publicly traded entity. The acquisition was the definitive 'Replacement Transaction,' essentially wiping the slate clean for the new private owner and providing an exit for public shareholders at a price of $3.02 per share. If you want to dive deeper into the company's core strategy, you can read the Mission Statement, Vision, & Core Values of SigmaTron International, Inc. (SGMA).

Liquidity and Solvency

You need a clear picture of SigmaTron International, Inc. (SGMA)'s ability to cover its near-term obligations, and honestly, the latest numbers show significant stress. The company's liquidity position, measured by its current and quick ratios, is weak, and the underlying cash flow trends point to a reliance on non-operating activities to shore up the balance sheet.

Assessing SigmaTron International, Inc. (SGMA)'s Liquidity

The standard metrics for short-term financial health-the current and quick ratios-paint a concerning picture for SigmaTron International, Inc. (SGMA). The current ratio, which measures current assets against current liabilities, sits at only 1.23 as of the latest reporting period. This means the company has only $1.23 in current assets for every dollar of short-term debt. A ratio closer to 2.0 is often preferred.

The Quick Ratio (Acid-Test Ratio), which strips out inventory-often the least liquid current asset-is even more telling, at just 0.34. This figure is defintely a red flag, indicating that without selling its inventory, the company cannot cover even half of its immediate liabilities with its most liquid assets (cash and receivables). That's a tight spot to be in.

Here's the quick math on their short-term position:

• Current Ratio: 1.23
• Quick Ratio: 0.34
• Total Debt (October 2024): $62.5 million

Working Capital and Cash Flow Trends

The working capital situation is under pressure, which is directly tied to the weak ratios. The balance sheet data from March 2025 indicated that SigmaTron International, Inc. (SGMA) had a deficit of approximately $107.4 million when comparing its cash and near-term receivables to its total current liabilities. This is the core of the liquidity issue. Management is focused on reducing inventory, a positive move, but it's a slow fix.

The cash flow statements for the nine months ended January 31, 2025, show the operational challenge. While the company reported a net income of $3.9 million in the third quarter of fiscal year 2025, this was a misleading figure. It was largely driven by a one-time $7.2 million gain from a sale/leaseback transaction on its Elk Grove Village facility. Absent this one-off gain, the company would have posted another significant operating loss, following a net loss of $8.9 million for the nine-month period.

This reliance on asset sales to generate a profit is a major concern. It signals that cash flow from operating activities is insufficient to cover the business's needs, forcing it to use financing activities-like debt reduction and asset sales-to manage its financial position. For example, the cash paid for interest alone for the nine months ended January 31, 2025, was $7,634,420.

Potential Liquidity Concerns and Actionable Next Steps

The primary concern is the company's dependency on non-core activities to mask operating cash flow weakness. The quick ratio of 0.34 means any sudden dip in customer payments or a hiccup in inventory conversion could immediately jeopardize its ability to pay short-term vendors. The debt load of $62.5 million is substantial for a company with this level of operational performance. You can review the strategic direction in the Mission Statement, Vision, & Core Values of SigmaTron International, Inc. (SGMA).

The short-term action is clear: watch the inventory reduction efforts closely, as that is the only way to organically improve that weak quick ratio. If the company cannot turn its inventory into cash faster, another financing move will be inevitable.

Valuation Analysis

You want to know if SigmaTron International, Inc. (SGMA) was overvalued or undervalued, but the answer is now definitive: the market priced its exit. The most critical valuation event in 2025 was the acquisition by Transom Capital Group, which effectively set the final price for common shareholders. The tender offer price of $3.02 per share in July 2025 is the concrete, realized valuation for the company's common stock.

Before the acquisition, the stock's trading history showed significant volatility. Over the 12 months leading up to November 2025, SigmaTron International's stock price moved between a 52-week low of $0.96 and a high of up to $3.60. This huge range shows the market was defintely unsure of its true worth, especially as the company navigated a challenging period with declining revenues.

Traditional Ratios vs. Acquisition Price

Looking at the traditional valuation metrics just prior to the acquisition announcement, the picture was mixed, suggesting a deeply discounted stock if a turnaround was possible. Here's the quick math on the trailing twelve months (TTM) data for the 2025 fiscal year:

• Price-to-Earnings (P/E) Ratio: The P/E ratio was negative, at approximately -1.50, because the company reported a net loss. A negative P/E ratio means the company is unprofitable, so this metric is unhelpful for a direct comparison.
• Price-to-Book (P/B) Ratio: The P/B ratio stood at a very low 0.32. This suggests the market was valuing the company's equity at less than a third of its book value, often a sign of a deeply undervalued stock or serious concerns about asset quality.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA was approximately 5.8x as of November 20, 2025. This is quite low compared to the industry median of 9.7x, which again points to a potential undervaluation or a high-risk profile that warranted a discount.

The low P/B and EV/EBITDA ratios strongly indicated the stock was undervalued on a fundamental basis, but the ultimate valuation was set by the private equity buyer at $3.02. This is a classic example of a strategic buyer seeing value (likely in the assets and operations) that the public market was unwilling to price in due to the company's recent losses and volatility.

Dividend Policy and Analyst Consensus

If you're an income-focused investor, SigmaTron International has not been a candidate for you. The company has not paid a cash dividend on its common stock since its initial public offering in 1994, and it has publicly stated it does not intend to pay any dividends in the foreseeable future. The dividend yield is 0.00%.

Analyst consensus on a 'Buy, Hold, or Sell' was largely unavailable or inconclusive in the run-up to the acquisition. However, some technical analyses suggested a 'Hold' rating, while others provided a high-end price forecast of up to $3.55 by December 2025. This split opinion is why the private equity bid is so important: it cuts through the noise. It tells you the price a sophisticated buyer was willing to pay to own the entire business, which was $3.02 per share. For a deeper dive into the company's operational health that drove this valuation, you can read our full analysis at Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at SigmaTron International, Inc. (SGMA), an electronic manufacturing services (EMS) company, and the first thing to understand is that the fiscal year 2025 results clearly map the immediate risks. The company is navigating a sharp revenue contraction, which puts pressure on its financial covenants. Simply put, the biggest risk is a prolonged market slowdown hitting their top line.

For the nine months ended January 31, 2025, SigmaTron International, Inc.'s revenues dropped by 21 percent to $230.6 million from $292.7 million in the same period last year. This revenue softness is the root of the financial stress, leading to a net loss of $8.9 million for the nine-month period, a significant shift from the $0.9 million net income a year prior.

External and Market Headwinds

The core of SigmaTron International, Inc.'s challenge is external-it's riding a global economic slowdown that has hit the entire EMS industry. This isn't unique to them; it's an industry-wide softness that has continued through fiscal 2025.

• Economic Turmoil: The turmoil in the global economy and financial markets, plus the ripple effects of geopolitical conflicts like the Russian invasion of Ukraine, creates a highly uncertain demand environment.
• Tariff and Trade Risk: Changes in U.S., Chinese, and other Asian regulations, especially the continuation of 301 and 232 tariffs on China at 25 percent, create cost volatility and trade friction. This is a defintely a factor in their multi-country manufacturing model.
• Customer Inventory Correction: A short-term headwind is the 'inventory correction' cycle. Customers over-ordered components during past supply chain volatility, and now they are consuming that excess inventory, which translates directly to lower near-term orders for SigmaTron International, Inc..

Operational and Financial Pressures

Beyond the market, the company faces operational and financial risks that are compounded by the revenue decline. The shift to a net loss of $8.9 million for the nine-month period highlights the financial strain.

• Debt and Covenants: High interest rates increase the cost of capital, and the company's ability to meet its financial and restrictive covenants under its loan agreements is a constant concern. Generating sufficient cash from operations to service and reduce debt is crucial.
• Supply Chain Volatility: While component availability has improved, the continued availability of scarce raw materials and general supply chain disruptions remains a risk, especially with their global manufacturing footprint in Mexico, China, and Vietnam.
• Profitability Reliance on One-Time Gains: The third quarter of FY2025 showed a net income of $3.9 million, but this was largely driven by a non-recurring gain of approximately $7.2 million from a sale/leaseback transaction. This masks the underlying operational loss and is not a sustainable path to profitability.

Actionable Mitigation Strategies

The good news is management isn't sitting still; they are executing clear, tactical steps to navigate this downturn. Here's the quick math: they generated a one-time capital infusion of around $7.2 million from selling and leasing back their Elk Grove Village property.

They are focusing on three core areas to regain control:

• Cost Structure Reduction: They have implemented overhead and cost reductions, coupled with reduced manufacturing schedules, to right-size the company for the lower revenue environment.
• Inventory De-leveraging: A major focus is reducing inventory to cut working capital requirements, which is essential for improving cash flow and reducing debt.
• Balance Sheet Focus: The company is actively working with Lincoln International to de-lever the balance sheet, using proceeds from asset sales like the sale/leaseback to directly address debt.

You can see the long-term strategic direction that guides these decisions in their Mission Statement, Vision, & Core Values of SigmaTron International, Inc. (SGMA).

Growth Opportunities

You need to know the bottom line for SigmaTron International, Inc. (SGMA) right now: the company's future as a publicly traded entity is essentially capped. The biggest near-term opportunity for shareholders is the successful closing of the merger agreement with Transom Capital Group, an operationally focused private equity firm, which was announced on May 21, 2025. This transaction is the clearest path to a return.

Under the terms of the agreement, Transom Capital Group is set to acquire all outstanding shares of SigmaTron International, Inc. for $3.02 per share in cash. This purchase price represented a significant premium of approximately 134% over the stock's closing price on May 20, 2025, valuing the company at roughly $83 million. The deal was expected to close in the third quarter of 2025, at which point the stock will be delisted from Nasdaq. The growth story for public investors is now a short-term liquidity event.

Here's the quick math on the acquisition:

• Acquisition Price Per Share: $3.02
• Total Enterprise Value: Approximately $83 million
• Premium to Prior Closing Price: 134%

What Transom Capital Group is buying-and what will drive the company's growth as a private entity-are the operational strengths SigmaTron International, Inc. has built over decades, plus the recent, aggressive cost-cutting measures. The company's core competitive advantage lies in its electronic manufacturing services (EMS) expertise and its globally strategic operational footprint, something Transom Capital Group intends to build on for long-term success.

The key growth drivers that made SigmaTron International, Inc. an attractive acquisition target, despite recent revenue softness, include:

• Global Manufacturing Footprint: A network of seven manufacturing facilities across the United States, Mexico, China, and Vietnam, offering a robust 'One Source, Global Options®' approach for customers.
• Cost Structure Reduction: Management's efforts to reduce operating expenses and consolidate operations, such as the sale of the Elgin, Illinois property, which helped position the company for significant upside.
• Balance Sheet Improvement: The strategic sale/leaseback transaction for its Elk Grove Village, Illinois facility, which recorded a gain of approximately $7.2 million in the third quarter of fiscal year 2025 (ended January 31, 2025), provided immediate capital to reduce debt.

To be fair, the financial results leading up to the acquisition announcement showed a challenging environment. For the nine-month period ended January 31, 2025, revenues were $230.6 million, a 21% decrease from the prior year, resulting in a net loss of $8.9 million. Still, the company posted an operating profit in January 2025, and management noted positive signs of demand returning as the electronic component marketplace began to normalize. That operational turnaround potential, combined with the structural changes, is what Transom Capital Group is banking on for future, private growth.

For a deeper dive into the company's financial context before the merger, you can read our full analysis at Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors.

What this estimate hides is the execution risk post-closing; once private, the new owners will defintely need to execute on the cost synergies and market recovery to justify their purchase price. For now, the public investment decision is simple: the acquisition price is the target.