Can Sanmina's Extended Manufacturing Footprint Aid Growth Prospects?

Sanmina Corporation SANM recently extended its manufacturing footprint with the launch of a new state-of-the-art factory in Houston, TX. The production facility will primarily develop a broad range of high-quality energy products to cater to the demands of the U.S. energy market. The products include medium-voltage distribution transformers, instrument transformers and switchgear, production of which is likely to commence from 2027.

As part of its focus on the energy markets, Sanmina has inked a definitive agreement with Koncar - Electrical Industry Inc. to co-design a custom medium-voltage transformer. This Croatia-based energy firm is widely known for spearheading the energy transition and driving the decarbonization of the global power sector.  

Sanmina prioritizes expanding into high-growth industries like the energy sector, backed by its strong global network, deep expertise and unique value proposition in advanced electronics manufacturing. Attracting and developing strong customer relationships by delivering high-level customer service is one of the key strategies to drive commercial expansion. Its vertically integrated manufacturing process streamlines processes and lowers costs, enabling Sanmina to achieve greater economies of scale.

How are Competitors Faring?

The company faces competition from Jabil, Inc. JBL and Celestica Inc. CLS in the electronic manufacturing services industry. Jabil’s revenues were $8.3 billion in the last reported quarter, up from $6.96 billion a year ago. Healthy demand in the healthcare & packaging, Capital Equipment, AI-related Cloud and Data Center Infrastructure verticals is driving growth. Jabil’s focus on end-market and product diversification is a key catalyst.

Celestica reported quarterly revenues of $3.19 billion, up 27.8% year over year. Solid growth in the hardware platform solutions portfolio, backed by hyperscale customer demand for networking products, including 400G switches and 800G switches, is driving growth. Increasing AI-driven data center investments across industries boast a solid growth potential for Celestica.

SANM’s Price Performance, Valuation and Estimates

Sanmina has gained 89.2% over the past year compared with the industry’s growth of 86%

From a valuation standpoint, Sanmina trades at a forward price-to-sales ratio of 0.55, below the industry tally of 0.84.

The Zacks Consensus Estimate for Sanmina’s earnings for 2025 has moved northward over the past 60 days.

Sanmina currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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