Sanmina (SANM) Highlighted As Today's Perilous Reversal Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sanmina ( SANM) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sanmina as such a stock due to the following factors:

  • SANM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.9 million.
  • SANM has traded 412,801 shares today.
  • SANM is down 3.1% today.
  • SANM was up 7.4% yesterday.

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More details on SANM:

Sanmina Corporation provides integrated electronics manufacturing services worldwide. SANM has a PE ratio of 16.9. Currently there are 4 analysts that rate Sanmina a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for Sanmina has been 740,500 shares per day over the past 30 days. Sanmina has a market cap of $1.8 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.05 and a short float of 4.3% with 3.57 days to cover. Shares are up 43.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sanmina as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, SANM's share price has jumped by 48.50%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SANM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SANMINA CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SANMINA CORP reported lower earnings of $0.92 versus $2.15 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $0.92).
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.10 is sturdy.

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