SigmaTron International, Inc. (SGMA)

Compare the latest earnings reports (Peers) BHE - Benchmark Electronics, KE - Kimball Electronics, CTS Corporation and SGMA -SigmaTron International:
BHE Q2 EPS = $0,27 and a stock price 27,6 $.
KE Q4 EPS = $0,58 and a stock price 25,1 $.
CTS Q2 Adjusted diluted EPS = $0,52 and a stock price 31,8 $
SGMA Q1 EPS = $0,69 excluding large gain (including PPP Loan EPS were $2.06) and a stock price just 8,3$. Low floater SGMA is one of the most undervalued stock in the market right now!

My take. Please reply if you have better info or a different understanding of the post-earnings roller coaster.

The post-earnings hard selling and fading all spikes. Is it a computer game or is it a 'no confidence' vote on the merger? Or is it tax-loss selling?

A huge number of shares have been traded while the stock price was above 10.5. This is one argument for tax loss selling creating the downdrafts, especially since the volume has been several multiples of the existing float. Program shorting to exacerbate tax loss selling is possible. This may be why some vertical drops on large sales without any attempt to 'leak' a large sell order in smaller multiple sales have occurred.

The merger itself has a cash clause with a ceiling of $2.4M in direct cash payment to WAGZ shareholders who opt for cash in lieu of stock. From what I have read, (and extrapolated based on "mergerspeak"), the $ outlay will be a function of the stock price on or within a range of the merger closing date. On 10/31, SGMA had only $2.42M cash. A lower stock basis just prior to the merger, provided that the $2.4M ceiling is not already at risk, is beneficial to existing SGMA shareholders. At risk is SGMA having to either issue even more stock with an additional offering, or having to absorb more debt to jack up its free cash.

$12M of Promissory Notes will be retired. My understanding is that this was WAGZ debt owed to SGMA. This will put a dent in SGMA's balance sheet. The amended merger agreement seems to simply substitute burying the $12M in the "reduction" of shares to be transferred to WAGZ.

The $600K that will be retired looks like it is the portion of WAGZ that was already owned by SGMA.

I haven't read any info on the SEC filings that leads me to understand that "new" SGMA shareholders from WAGZ will be required to hold any SGMA shares for any period of time. That produces 1.5M shares of overhang.

This is my understanding of the recent roller coaster ride / merger, which should close on "around" Friday. Unfortunately, the good ol' days of mergers that a mortal could understand are long gone. Maybe some day the SEC will require that a synopsis, in English, will be required. Hopefully the bungee cord attached to SGMA's share price will be removed after the merger or after Friday's end-of-year book balancing.

The average market cap to revenue ration for electronics companies is a humble 2.39. SGMA sits at 0.16 extrapolating the last quarter times 4 as a flat run rate. Therefore the stock price should be $223.57 in 12 months with no change in outstanding shares, a 1396% gain. If P/E is your yardstick, the average is around 23 and SGMA sits at 5.76. So again, with no change in outstanding shares, the share price should be 4 X = $59.76, or 300% up. The average between these is $141.67, or 10X from today. Sure, there'll be ups and downs, but if they stay on track, the $141 is very achievable and still maintain a low cap:revenue multiple.

• Global semiconductor sales were up 29% on the year in July to $45.4B, a 2.1% increase on the prior month, according to new data from the Semiconductor Industry Association.
• “Global semiconductor sales remained strong in July, with robust demand across all major regional markets and semiconductor product categories,” said John Neuffer, SIA president and CEO. “Chip production and shipments have reached all-time highs in recent months as the industry works to address sustained high demand.”
• Month-over-month sales growth by region: Americas 4.2%; China 1.2%; Japan 3.2%; Asia Pacific/All Other 2.0%, but fell 0.8% in Europe.
https://seekingalpha.com/news/3737331-global-semiconductor-sales-up-21-mm-expects-251-yy-growth-in-fy21

The stock is very small, but it is getting bigger. The company is much
larger and growing very fast. The WAGZ acquisition is a great idea.
Home run kind of idea. This stock is very cheap with a great product!
It does not get any better than this.