Why Is Sanmina (SANM) Up 9.6% Since Last Earnings Report?

Sanmina (SANM) shares have risen 9.6% since its last earnings report, outperforming the S&P 500; however, fresh estimates have trended downward, with the consensus estimate shifting -15.33% in the past month, leading to a Zacks Rank #4 (Sell) and an expectation of below-average returns in the coming months. In comparison, Celestica (CLS), another stock in the same industry, has gained 36.6% over the past month, with positive revenue and EPS growth reported, and a more favorable Zacks Rank #3 (Hold).

Analysis

Sanmina Corporation (SANM) shares have appreciated 9.6% since its last earnings report, outperforming the S&P 500. However, this price momentum is juxtaposed with a deteriorating outlook from analysts, evidenced by a significant -15.33% downward revision in the consensus earnings estimate over the past month. Consequently, Sanmina currently holds a Zacks Rank #4 (Sell), suggesting an expectation of below-average returns in the upcoming months. While the company scores an A for overall VGM (Value B, Growth B, Momentum C), the negative estimate revisions are a primary concern. In contrast, Celestica (CLS), a peer in the Zacks Electronics - Manufacturing Services industry, has seen its shares gain 36.6% over the past month. Celestica reported robust Q1 results with revenues of $2.65 billion, a 19.9% year-over-year increase, and EPS of $1.20, up from $0.86. Furthermore, Celestica's consensus estimate has seen a +1.9% upward revision in the last 30 days, with an expected EPS growth of +35.2% for the current quarter, leading to a Zacks Rank #3 (Hold) and a VGM Score of B.

Key Decisions for Investors

• Investors should be cautious regarding Sanmina's (SANM) recent 9.6% stock price increase, as it sharply contrasts with a -15.33% downward revision in consensus earnings estimates and a Zacks Rank #4 (Sell).
• Monitor upcoming earnings and analyst revisions for Sanmina closely, as the current divergence between stock performance and estimate trends suggests potential for a price correction or indicates market sentiment is overlooking fundamental headwinds.
• Consider the relative performance and outlook within the Electronics - Manufacturing Services industry, noting that peer Celestica (CLS) shows stronger recent stock gains, positive earnings growth, and a more favorable analyst outlook with a Zacks Rank #3 (Hold).