Is Sanmina Stock a Smart Buy Before Q1 Earnings Report?

Sanmina Corporation SANM is scheduled to report first-quarter fiscal 2026 earnings after the market closes on Jan. 26. The Zacks Consensus Estimate for sales and earnings is pegged at $3.1 billion and $2.15 per share, respectively. Earnings estimates for fiscal 2026 and 2027 have remained stable at $9.64 and $11.46, respectively, over the past 60 days.

SANM Estimate Trend

Earnings Surprise History

The leading electronics manufacturing services provider delivered a trailing four-quarter earnings surprise of 5.35%, on average, beating estimates in each of the previous quarters. In the last reported quarter, the company’s earnings surprise was 6.37%.
 

Earnings Whispers

Our proven model does not predict an earnings beat for Sanmina for the first 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 ESP of 0.00% 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

During the quarter, Sanmina completed the acquisition of ZT Systems’ data center infrastructure manufacturing business from Advanced Micro Devices, Inc. AMD in a deal valued at up to $3 billion. This agreement significantly strengthens Sanmina’s position in the Cloud and AI market. It expands Sanmina’s manufacturing scale, adds advanced facilities in New Jersey, Texas, and the Netherlands, and enhances capabilities such as systems integration, liquid cooling, and end-to-end production. This is likely to have generated incremental revenues in the upcoming quarter.

Sanmina also entered into a partnership with Koncar, an electrical industry company, to co-design a custom medium-voltage transformer and explore further collaboration, strengthening its position in power transmission, distribution, and energy infrastructure manufacturing. This is likely to have generated higher revenues in the quarter.

Price Performance

Over the past year, Sanmina has surged 116.2% compared with the Electronics - Manufacturing Services industry’s growth of 84.4%. The company also outpaced its peer Jabil Inc. JBL, which has gained 47.6%, while trailing Celestica Inc. CLS, whose shares rose an impressive 129.8% over the same period.

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 17.76 forward earnings, lower than 25.74 for the industry but higher than the stock’s mean of 11.46.

Investment Considerations

Sanmina is experiencing strong demand across key end markets, with growth driven mainly by communications networks, cloud and AI infrastructure, medical, and defense and aerospace businesses. Its diversified presence reduces reliance on any single industry, while its end-to-end offerings from design to manufacturing and support give it a competitive edge.

Despite its strengths, Sanmina faces ongoing supply-chain disruptions, causing component shortages, delivery delays, and inventory buildup. Strong competition from larger EMS is pressuring sales and margins. High exposure to overseas manufacturing increases geopolitical risks, tariffs, and higher costs, while elevated R&D spending further weighs on profitability.

End Note

Sanmina remains committed to making strategic investments in the capabilities and technologies necessary to strengthen its market position and support long-term financial goals. Its dynamic manufacturing strategy remains a major advantage. However, the company faces challenges from strong competition, supply chain issues, high R&D costs, and a difficult operating environment in China, which could pressure profitability and raise concerns about long-term operations there.

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

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