Markets

Why Sanmina Corporation Jumped as Much as 14% Today

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.

Shares of took another deep dive on Friday. Shares fell as much as 13.2% as the company decent second-quarter earnings but weak sales, and then offered disappointing guidance for the next quarter.

What: Shares of Sanmina Corporation opened 13% higher on Tuesday, and were up 11.5% around 1:40 p.m. Tuesday, following Monday night's release of strong third-quarter results . The maker of manufacturing tools for the electronics sector beat analyst targets across the board, and management followed up with raised guidance for the fourth quarter.

So what: Sanmina's sales declined 3.8% year-over-year, landing at $1.54 billion. Adjusted earnings held steady at $0.53 per share. Analysts had their sights set on $1.52 billion and $0.49 per share, respectively. For the next quarter, the lower end of Sanmina's guidance range lines up with current analyst projections, leaving headroom for another solid quarter.

Sanmina logo

Image source: Sanmina.

Now what: Heading into this report, Sanmina shares had lost about 13% of their value over the previous month. Strong warningsignals from the semiconductor market raised red flags over Sanmina's semiconductor tools sales and seemed to be a bad sign for the assembled electronics devices that support 78% of Sanmina's total revenues. If chip makers aren't gearing up to build more of their products, then there's surely a slowdown coming for electronic devices in consumer and industrial markets as well.

But Sanmina delivered solid sales and profits anyhow. CEO Jure Sola pointed to "consistent execution coupled with ongoing diversification" as key drivers for this quarter's unflappable performance.

The rosy outlook for the end of the year is based on a stable market. "We remain confident the second half of the calendar year will continue to improve," Sola said in a press statement.

In other words, don't take this positive report as proof of a quick recovery for the overall electronics markets -- devices and manufacturing partners alike. Sanmina may very well have out-executed its peers and rivals this time.

Other electronics manufacturing specialists might still report the exact type of gloomy results that investors were expecting from Sanmina. Flextronics surged 2% higher on Sanmina's good news while Plexus shares held steady. Both still trade at significantly higher P/E ratios than Sanmina -- and both are set to report results later this week.

For a more complete picture of the raw underpinnings of the electronics market, keep an eye on these earnings releases. We'll know much more in the next two days.

This $19 trillion industry could destroy the Internet

One bleeding-edge technology is about to put the World Wide Web to bed. And if you act quickly, you could be among the savvy investors who enjoy the profits from this stunning change. Experts are calling it the single largest business opportunity in the history of capitalism... The Economist is calling it "transformative"... But you'll probably just call it "how I made my millions." Don't be too late to the party -- click here for one stock to own when the Web goes dark.

The article Why Sanmina Corporation Jumped as Much as 14% Today originally appeared on Fool.com.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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 .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SANM

Other Topics

Stocks

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More