Sanmina Corporation (NASDAQ:SANM), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Sanmina's outlook and valuation to see if the opportunity still exists.
Is Sanmina Still Cheap?
Great news for investors – Sanmina is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 12.17x is currently well-below the industry average of 19.54x, meaning that it is trading at a cheaper price relative to its peers. However, given that Sanmina's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Sanmina generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. Though in the case of Sanmina, it is expected to deliver a relatively unexciting earnings growth of 2.3%, which doesn't help build up its investment thesis. Growth doesn't appear to be a main reason for a buy decision for Sanmina, at least in the near term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since SANM is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you've been keeping an eye on SANM for a while, now might be the time to make a leap. Its future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy SANM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Sanmina and we think they deserve your attention.
If you are no longer interested in Sanmina, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.