Sanmina (SANM) Stock: Climbing On Earnings | Will Gains Continue?

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Sanmina Corp (NASDAQ: SANM)

Sanmina is having an incredible day in the market today, and for good reason. The company was scheduled to report Q1 earnings yesterday, and they reported as expected. What wasn’t expected was the fact that the company would produce incredibly strong guidance for Q2. Today, we’ll take a look at what we saw from the earnings report, how the market reacted to the news, and talk about what we can expect to see from SANM Moving forward. So, let’s get right to it!

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SANM Produces An Overwhelmingly Positive Earnings Report

As mentioned above, SANM reported earnings for the first fiscal quarter yesterday. While earnings came in right in line with expectations, and revenue missed expectations, guidance proved to be overwhelmingly positive. Here’s what we saw from the report:

  • Earnings – In terms of earnings, Sanmina came in right in line with expectations, producing a total of $0.58 per share for the quarter.
  • Revenue – Revenue came in below expectations. While analysts expected for the company to generate revenue in the amount of $1.59 billion, the company actually produced $1.53 billion in revenue, falling slightly short of expectations.
  • Guidance – This is where the positive news starts to flow. After announcing earnings data, SANM announced guidance for Q2, which proved to be incredibly positive. In the quarter, analysts expected to see guidance on earnings in the amount of $0.52 per share. However, the company believes it will generate between $0.55 and $0.59 per share for shareholders in Q2. In terms of revenue, analysts expected the company to guide toward $1.56 billion. However, the company is expecting to generate revenue amounting between $1.55 and $1.65 billion for the quarter. While earnings were on point and revenue was a miss, the strong guidance is causing incredible investor excitement.

Following the release of the data, Jure Sola, Chairman and CEO at SANM had the following to say:

We delivered solid margin improvement, EPS expansion and cash generation on a sequential basis, despite softer than expected revenue… As we look to the second quarter, demand is stable with growth driven by new programs. We remain optimistic that fiscal 2016 will be a growth year…”

How SANM Reacted In The Market

As investors, we’ve learned that there are few things that move the market quite like solid guidance following a decent earnings report. So naturally, SANM is climbing in the market today. Currently (10:40), the stock is trading at $19.05 per share after a gain of 9.61% so far today.

What We Can Expect From SANM Moving Forward

Moving forward, I’m expecting to see overwhelmingly positive news out of SANM. Ultimately, investors are investing in order to see growth from the companies they put money into. Through a solid earnings history, SANM has proven its ability to grow. Even in the face of global economic struggles, the company has been able to increase margins on products, leading to growth in EPS for the last 4 consecutive quarters, and is predicting further growth in EPS for the current quarter. All in all, things are going in the right direction for this stock and its investors.

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What Do You Think?

Where do you think SANM is headed moving forward? Let us know your opinion in the comments below!

[Image Courtesy of Geograph]

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