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

Are you keeping a close watch on SigmaTron International, Inc. (SGMA) and trying to decode its financial performance? In the second quarter of fiscal year 2025, the company faced a revenue dip of 24%, landing at $74.7 million compared to $98.7 million the previous year, and reported a net loss of $9.5 million, or $1.55 per share. How will strategic moves like the sale/leaseback transaction for the Elk Grove Village facility, which generated a gain of approximately $7.2 million in the third quarter of fiscal 2025, influence its trajectory? Dive in as we dissect the key financial indicators, strategic decisions, and market challenges that define SGMA's financial narrative.

SigmaTron International, Inc. (SGMA) Revenue Analysis

Understanding where SigmaTron International, Inc. (SGMA) generates its revenue is crucial for investors. A detailed look into its revenue streams provides insights into the company's stability and growth potential. For a broader view on the company's financial health, check out: Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors

SigmaTron International, Inc. (SGMA) primarily generates revenue through:

• Electronic Manufacturing Services (EMS): This includes providing manufacturing, engineering, and testing services for electronic assemblies and sub-assemblies.
• Printed Circuit Board Assemblies (PCBAs): Manufacturing and assembling printed circuit boards, which are essential components in electronic devices.
• Full Box Build Assembly: Assembling complete electronic products, from component sourcing to final product assembly and testing.

Analyzing the year-over-year revenue growth rate provides a perspective on the company’s performance. While specific 2024 figures are not available, examining historical trends can offer insights:

For instance, let's consider a hypothetical scenario based on available information:

In this hypothetical scenario, the year-over-year revenue growth shows a positive trend, although there is a slight deceleration in the growth rate from 2022 to 2024. Actual figures may vary, and investors should refer to the latest financial reports for precise data.

To understand the contribution of different business segments to SigmaTron International, Inc.'s (SGMA) overall revenue, consider this illustrative breakdown:

• EMS: Contributes approximately 70% of the total revenue.
• PCBAs: Accounts for about 20% of the revenue.
• Full Box Build Assembly: Makes up the remaining 10%.

Significant changes in revenue streams could involve:

• New Contracts: Winning large contracts with new or existing clients can boost revenue.
• Market Expansion: Entering new geographic markets or industries can diversify revenue sources.
• Technological Advancements: Adopting new technologies or services can attract more business.

SigmaTron International, Inc. (SGMA) Profitability Metrics

Analyzing SigmaTron International, Inc. (SGMA)'s profitability involves looking at several key metrics that show how well the company is managing its costs and generating income. These metrics include gross profit, operating profit, and net profit margins. Examining these figures over time and comparing them to industry averages provides valuable insights into the company's financial health and operational efficiency. For further information, you might find this resource helpful: Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors.

To assess SigmaTron International, Inc. (SGMA)’s profitability, consider the following:

• Gross Profit: This is the revenue left after subtracting the cost of goods sold (COGS). It indicates how efficiently a company uses its materials and labor to produce goods or services.
• Operating Profit: This metric deducts operating expenses, such as administrative and sales costs, from the gross profit. It reflects the profit earned from the company's core business operations before interest and taxes.
• Net Profit: Often referred to as the bottom line, net profit is what remains after all expenses, including interest and taxes, have been subtracted from total revenue.

Profit margins are calculated by dividing each profit type by the total revenue. These margins are usually expressed as percentages and are essential for comparing SigmaTron International, Inc. (SGMA)’s performance over different periods and against its competitors.

Trends in profitability can reveal whether SigmaTron International, Inc. (SGMA) is improving its efficiency and cost management. Declining margins might indicate rising costs, pricing pressures, or operational inefficiencies. Conversely, increasing margins suggest better cost control, improved pricing strategies, or more efficient operations.

Comparing SigmaTron International, Inc. (SGMA)'s profitability ratios with industry averages helps to contextualize its performance. If the company's margins are consistently higher than the industry average, it may indicate a competitive advantage. Lower margins might suggest areas needing improvement.

Operational efficiency is critical for maintaining and improving profitability. Effective cost management and favorable gross margin trends are indicators of a well-run company. For example, a company that can reduce its production costs or negotiate better prices with suppliers will likely see improved gross margins.

Here's an example of how to analyze profitability metrics (note that the following data is illustrative):

In this example, both revenue and profits are increasing, suggesting positive trends. The consistent gross margin indicates stable production efficiency, while improvements in operating and net profit margins show enhanced overall profitability.

SigmaTron International, Inc. (SGMA) Debt vs. Equity Structure

Understanding how SigmaTron International, Inc. (SGMA) manages its debt and equity is crucial for assessing its financial strategy and risk profile. This involves looking at the levels of debt the company holds, comparing its debt-to-equity ratio against industry benchmarks, and noting any recent activities related to debt.

As of the third quarter of fiscal year 2024, which ended on January 31, 2024, SigmaTron International, Inc. (SGMA) reported the following:

• Total debt of $24.5 million.
• Stockholders' equity of $74.9 million.

SigmaTron International, Inc. (SGMA) has total debt of $24.5 million. It's important to distinguish between the types of debt a company holds. Long-term debt represents obligations extending beyond one year, often used for significant investments in infrastructure or acquisitions. Short-term debt, on the other hand, includes obligations due within a year, such as accounts payable, short-term loans, and the current portion of long-term debt. The specifics of SigmaTron International, Inc. (SGMA)'s debt structure would provide insights into their financing strategy and immediate liabilities.

The debt-to-equity ratio is a key metric used to evaluate a company's financial leverage. It indicates the proportion of debt and equity a company is using to finance its assets. As of January 31, 2024, SigmaTron International, Inc. (SGMA) had a debt-to-equity ratio of approximately 0.33, calculated as total debt of $24.5 million divided by stockholders' equity of $74.9 million. This ratio suggests that SigmaTron International, Inc. (SGMA) relies more on equity than debt to finance its operations. A lower ratio can be seen as less risky, indicating a more conservative approach to financial leverage compared to companies with higher ratios.

To provide a clearer picture, here's a summary of SigmaTron International, Inc. (SGMA)'s debt and equity figures based on the latest available data:

Recent debt issuances, credit ratings, or refinancing activities can significantly impact a company's financial health. For instance, a debt issuance might provide capital for expansion, but it also increases financial leverage. Credit ratings, assigned by agencies like Standard & Poor's or Moody's, reflect the creditworthiness of a company, influencing the interest rates it can secure on debt. Refinancing activities might lower interest payments or extend the debt maturity schedule, providing financial flexibility.

SigmaTron International, Inc. (SGMA) appears to be balancing its debt and equity effectively, maintaining a relatively low debt-to-equity ratio. Understanding the company's strategies in balancing debt financing and equity funding is essential. Companies often use debt to finance growth because of the potential to increase returns on equity, but too much debt can increase financial risk. Equity funding, on the other hand, can provide a stable capital base without the obligation of repayment, though it may dilute ownership.

For more insights into SigmaTron International, Inc. (SGMA)'s values and long-term goals, check out: Mission Statement, Vision, & Core Values of SigmaTron International, Inc. (SGMA).

SigmaTron International, Inc. (SGMA) Liquidity and Solvency

Analyzing SigmaTron International, Inc.'s financial health involves a detailed look at its liquidity and solvency, which are vital for investors to understand the company's ability to meet its short-term and long-term obligations. These metrics provide insights into the company's operational efficiency and financial stability.

Assessing SigmaTron International, Inc.'s Liquidity:

Liquidity ratios measure a company's ability to cover its short-term liabilities with its short-term assets. Key ratios include the current ratio and the quick ratio.

• Current Ratio: The current ratio is calculated by dividing current assets by current liabilities. A current ratio of 1.7 indicates that SigmaTron International, Inc. has $1.70 of current assets for every $1.00 of current liabilities.
• Quick Ratio: The quick ratio excludes inventory from current assets to provide a more conservative measure of liquidity. SigmaTron International, Inc.'s quick ratio is 1.1, suggesting the company has $1.10 of readily available assets to cover each $1.00 of current liabilities.

Analysis of Working Capital Trends:

Working capital, the difference between current assets and current liabilities, is a key indicator of a company's short-term financial health. Monitoring the trends in working capital helps assess whether the company is efficiently managing its short-term resources.

• SigmaTron International, Inc. demonstrates a robust working capital position. The company’s working capital was $69.8 million as of January 31, 2024, up from $54.8 million as of January 31, 2023.

Cash Flow Statements Overview:

The cash flow statement provides a comprehensive view of all cash inflows and outflows, categorized into operating, investing, and financing activities.

• Operating Activities: Cash provided by operating activities was approximately $13.3 million for the nine months ended January 31, 2024, compared to $3.4 million for the nine months ended January 31, 2023.
• Investing Activities: Investing activities used approximately $1.3 million for the nine months ended January 31, 2024, versus $0.7 million for the nine months ended January 31, 2023.
• Financing Activities: Financing activities used approximately $1.7 million for the nine months ended January 31, 2024, compared to providing $0.3 million for the nine months ended January 31, 2023.

Potential Liquidity Concerns or Strengths:

SigmaTron International, Inc. shows strong liquidity positions based on its current and quick ratios. The increase in cash provided by operating activities and a healthy working capital balance further support this assessment. However, investors should monitor the trends in investing and financing activities to ensure they do not negatively impact overall liquidity.

Here is a summary of SigmaTron International, Inc.'s key financial data:

For further insights, you can read more here: Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors

SigmaTron International, Inc. (SGMA) Valuation Analysis

Assessing whether SigmaTron International, Inc. (SGMA) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst opinions. This Breaking Down SigmaTron International, Inc. (SGMA) Financial Health: Key Insights for Investors delves into these aspects to provide a comprehensive valuation perspective.

Several ratios are critical in determining valuation:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of earnings. A high P/E ratio might suggest overvaluation, while a low P/E could indicate undervaluation, relative to industry peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. A lower P/B ratio may suggest that the stock is undervalued.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio compares the company's enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It's useful for evaluating companies with varying capital structures.

Analyzing SigmaTron International, Inc.'s stock price trends over the past year, or longer, provides context on market sentiment and investor confidence. Significant price appreciation could suggest growing optimism, while a declining trend might indicate concerns about the company's prospects.

For companies that distribute dividends, the dividend yield and payout ratio are important valuation considerations. However, this may not apply to SigmaTron International, Inc. (SGMA) if it does not offer dividends.

Finally, analyst consensus, categorized as buy, hold, or sell recommendations, reflects the overall sentiment of financial analysts covering SigmaTron International, Inc. These ratings are typically based on thorough analysis of the company's financials, market position, and growth potential.

SigmaTron International, Inc. (SGMA) Risk Factors

SigmaTron International, Inc. (SGMA) faces a variety of risks that could significantly impact its financial health. These risks span internal operational challenges and external market dynamics.

Industry Competition: The electronics manufacturing services (EMS) industry is intensely competitive. SigmaTron competes with numerous companies, some of which have greater financial, technical, and marketing resources. Increased competition could lead to pricing pressures, reduced profit margins, and loss of market share. For example, larger competitors might offer lower prices or more comprehensive service packages, making it difficult for SigmaTron to maintain its competitive edge.

Regulatory Changes: Changes in regulations, both domestic and international, can pose significant risks. These could include environmental regulations, trade policies, and labor laws. Compliance with new regulations can be costly and time-consuming, potentially affecting SigmaTron's profitability. For instance, changes in tariffs or trade agreements could increase the cost of materials or reduce access to key markets.

Market Conditions: Economic downturns or fluctuations in specific industries that SigmaTron serves can reduce demand for its services. A decrease in overall economic activity or a slowdown in the technology sector, for example, could lead to lower sales and reduced earnings. Additionally, rapid technological changes could render some of SigmaTron's services obsolete, requiring significant investments in new technologies and capabilities.

Operational Risks: Operational risks include potential disruptions in the supply chain, quality control issues, and difficulties in managing manufacturing processes. Any significant disruption could lead to delays in production, increased costs, and damage to SigmaTron's reputation. Effective supply chain management and stringent quality control are crucial to mitigating these risks.

Financial Risks: Financial risks encompass factors such as fluctuations in currency exchange rates, interest rate volatility, and the availability of financing. Unfavorable movements in exchange rates can negatively impact revenue and profitability, especially for companies with significant international operations. Changes in interest rates can affect the cost of borrowing and the overall financial health of the company.

Strategic Risks: Strategic risks involve decisions related to business strategy, investments, and acquisitions. Poor strategic decisions can lead to misallocation of resources and failure to capitalize on market opportunities. For example, an unsuccessful acquisition or an ill-fated expansion into a new market could result in significant financial losses.

SigmaTron's Form 10-K filings with the Securities and Exchange Commission (SEC) outline several key risk factors that could affect its future performance. These risks include:

• Dependence on Key Customers: A significant portion of SigmaTron's revenue comes from a limited number of key customers. The loss of one or more of these customers could have a material adverse effect on the company's financial results. Maintaining strong relationships with these customers and diversifying the customer base are critical.
• Component Availability and Pricing: SigmaTron relies on various suppliers for components used in its manufacturing processes. Shortages of components or significant increases in component prices could disrupt production and increase costs. Effective supply chain management and diversification of suppliers are essential to mitigating this risk.
• Fixed Asset Impairments: SigmaTron has significant investments in fixed assets, such as manufacturing equipment and facilities. If these assets become impaired due to technological obsolescence or other factors, the company may need to write down their value, which could negatively impact its financial results. Regular assessment of asset values and strategic investments in new technologies are important.
• Credit Risk: SigmaTron faces the risk that its customers may not be able to pay their invoices in a timely manner. This could lead to bad debts and negatively impact the company's cash flow. Credit risk management, including careful evaluation of customer creditworthiness and the use of credit insurance, is essential.

While specific mitigation strategies are not always detailed in public filings, SigmaTron likely employs various measures to address these risks, such as:

• Diversifying its customer base to reduce reliance on any single customer.
• Implementing robust supply chain management practices to ensure the availability of components at competitive prices.
• Investing in new technologies and equipment to maintain its competitive edge.
• Carefully managing its credit risk to minimize bad debts.

Understanding these risks is crucial for investors assessing SigmaTron's financial health and future prospects. A comprehensive analysis of these factors, along with the company's financial statements and other public information, can provide valuable insights into the potential challenges and opportunities facing SigmaTron.

SigmaTron International, Inc. (SGMA) Growth Opportunities

For SigmaTron International, Inc. (SGMA), several factors could drive future growth. These encompass strategic initiatives, market dynamics, and the company's competitive positioning.

Key growth drivers for SigmaTron International, Inc. (SGMA) may include:

• Product Innovations: Investment in new technologies and manufacturing processes can enable SigmaTron to offer advanced solutions, attracting new customers and expanding its market share.
• Market Expansion: Entering new geographic regions or serving additional industries could significantly increase SigmaTron's revenue base.
• Acquisitions: Strategic acquisitions of complementary businesses can broaden SigmaTron's service offerings and customer base.

Predicting future revenue growth and earnings requires considering various factors. While specific projections for SigmaTron International, Inc. (SGMA) aren't available, several considerations are paramount:

• Industry Trends: The overall growth rate of the electronics manufacturing services (EMS) industry will influence SigmaTron's potential.
• Competitive Landscape: SigmaTron's ability to win new contracts and retain existing customers is crucial.
• Economic Conditions: Economic downturns can reduce demand for electronic products, impacting SigmaTron's revenue.

Strategic initiatives and partnerships are vital for SigmaTron's future growth. These may include:

• New Partnerships: Collaborating with technology providers or distributors can expand SigmaTron's reach and capabilities.
• Capacity Expansion: Investing in additional manufacturing capacity can enable SigmaTron to handle larger contracts and meet growing demand.

SigmaTron's competitive advantages play a key role in positioning the company for growth. These advantages could include:

• Strong Customer Relationships: Long-standing relationships with key customers provide a stable revenue stream and opportunities for expansion.
• Technological Expertise: Specialized knowledge in specific areas of electronics manufacturing can differentiate SigmaTron from its competitors.
• Efficient Operations: Streamlined manufacturing processes and effective cost management can improve profitability and competitiveness.

For further insights into the company's values and direction, review the Mission Statement, Vision, & Core Values of SigmaTron International, Inc. (SGMA).