Sanmina Corporation (NASDAQ:SANM) Just Released Its First-Quarter Earnings: Here's What Analysts Think
It's been a good week for Sanmina Corporation (NASDAQ:SANM) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.8% to US$33.05. The result was positive overall - although revenues of US$1.8b were in line with what the analysts predicted, Sanmina surprised by delivering a statutory profit of US$0.72 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Sanmina
Taking into account the latest results, the consensus forecast from Sanmina's dual analysts is for revenues of US$7.21b in 2021, which would reflect a reasonable 4.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 31% to US$2.88. Before this earnings report, the analysts had been forecasting revenues of US$7.21b and earnings per share (EPS) of US$2.52 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.
The consensus price target was unchanged at US$39.67, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Sanmina's rate of growth is expected to accelerate meaningfully, with the forecast 4.8% revenue growth noticeably faster than its historical growth of 3.5%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.5% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Sanmina is expected to grow slower than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sanmina's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Sanmina's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Sanmina. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Sanmina going out as far as 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Sanmina that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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