Sanmina Corporation SANM is scheduled to report second-quarter fiscal 2026 earnings after market close on April 27. The Zacks Consensus Estimate for sales and earnings is pegged at $3.27 billion and $2.42 per share, respectively. Earnings estimates for fiscal 2026 and 2027 have increased 1.29% and 1.98%, respectively, over the past 60 days.
SANM Estimate Trend
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Earnings Surprise History
The leading electronics manufacturing services provider delivered a trailing four-quarter earnings surprise of 6.75%, on average, beating estimates in each of the previous quarters. In the last reported quarter, the company’s earnings surprise was 10.7%.
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Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Sanmina for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Sanmina currently has an Earnings ESP of -0.72% and carries a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping the Quarterly Performance
Sanmina’s Integrated Manufacturing Solutions (IMS) segment is witnessing healthy traction in the cloud and AI infrastructure market. Continuous expansion of data center capacity to support growing AI workloads by hyperscalers has created a strong growth opportunity for Sanmina. Demand for Enterprise storage systems and high-performance network switches, which can handle large-scale AI processing and data-intensive applications, remains strong.
An AI data center requires fast and efficient data transmission between servers, processors and networking equipment. Amid this, Sanmina is witnessing a growing momentum in advanced optical packaging, which is becoming a critical component in AI infrastructure deployments for its reduced latency and improved bandwidth efficiency. The company is also benefiting from growing adoption of higher-speed networking platforms, including 400G, 800G and emerging 1.6T systems. Such factors are expected to have a favorable impact on Sanmina’s earnings in the second quarter of fiscal 2026.
However, Sanmina’s growth prospects, at least in the near term, are heavily tied to customer AI-related spending. Constrained spending behavior stemming from geopolitical unrest and macro headwinds can hinder Sanmina’s top-line expansion in the near term. Sanmina also faces stiff competition in the electronics manufacturing services industry from Jabil, Inc. JBL and Celestica, Inc. CLS.
Price Performance
Over the past year, Sanmina has surged 127.7% compared with the Electronics - Manufacturing Services industry’s growth of 196%. The company also outpaced its peer Jabil, which has gained 142.9%, while trailing Celestica, whose shares rose an impressive 355.6% over the same period.
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Key Valuation Metric
From a valuation standpoint, Sanmina appears to be trading relatively lower than the industry but above its mean. Going by the price/earnings ratio, the company’s shares currently trade at 15.45 forward earnings, lower than 28.5 for the industry but lower than the stock’s mean of 17.46.
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Investment Considerations
Sanmina is benefiting from solid demand in the Communications Networks and Cloud & AI Infrastructure vertical. Amid growing geopolitical unrest and global macro uncertainty, Sanmina’s vertically integrated manufacturing strategy is a major advantage. The company offers end-to-end solutions that include product designing, manufacturing, assembling, testing, and aftermarket support. Such an end-to-end approach allows clients to rely on a single partner throughout the product lifecycle management.
This approach streamlines processes and lowers costs, enabling Sanmina to achieve greater economies of scale. It significantly accelerates time to market and time to volume production. Vertical integration allows Sanmina to easily develop customized solutions that cater to varied customer specifications operating in multiple sectors.
Strong operational execution and improvement in working capital management are other major contributors to cash flow growth. However, Sanmina is witnessing demand softness in industrial & Energy, Medical, Defense & Aerospace, and Automotive & Transportation. Despite its vertically integrated setup, the company is facing supply chain issues. The war in Europe and the Middle East has impacted its suppliers and port operations.
End Note
Sanmina is benefiting from solid momentum in the IMS segment. Strong growth in cash flow, and focus on efficient working capital management are positive factors. A vertically integrated manufacturing setup increases its reliability among enterprise customers. However, the company is affected by supply chain issues. Stiff competition in the EMS industry is straining margins. With a Zacks Rank #3, SANM appears to be treading in the middle of the road, and new investors could be better off if they trade with caution.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
