Why Sanmina Shares Surged


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electronics contract manufacturer Sanmina-SCI (NAS: SANM) soared 19% today, after its quarterly results topped Wall Street expectations.

So what: Sanmina shares have slumped in 2012 on weaker-than-expected growth, but today's wide fourth-quarter earnings beat -- adjusted EPS of $0.46 versus the consensus of just $0.34 -- suggests that things are starting to turn. Management also announced a restructuring plan for two of its manufacturing facilities, which should improve operational costs and capacity utilization, giving investors plenty of optimism over its profitability going forward.

Now what: For the current quarter, management now sees adjusted EPS of $0.31-$0.37 on revenue of $1.5 billion-$1.55 billion, a little below Wall Street's estimate of $0.37 and $1.6 billion. According to Chairman and CEO Jure Sola:

Our first quarter fiscal 2013 guidance reflects continued uncertainty in the market. Though the macro-environment is challenging, we have taken action to position us for improved performance in fiscal 2013.

With the stock still off about 30% from its 52-week high and trading at a forward P/E of 6, there might even be some room left to buy into that bullishness.

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The article Why Sanmina Shares Surged originally appeared on Fool.com.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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