Sanmina-SCI - Aggressive Growth

Sanmina-SCI (SANM) analysts are looking for sizable growth for the next couple of years. Estimates continue to inch higher, pushing shares to a Zacks #1 Rank (Strong Buy).

Company Description

Sanmina-SCI is an electronics contract manufacturer. The company works with OEMs in the communications, defense and aerospace, industrial, medical and other industries.

Revenue Up 12.5%

On Jan 24 Sanmina-SCI reported first quarter results for fiscal 2011 that included revenue of $1.66 billion, up 12.5% since last year. Net income was off, but Q1 in 2010 was skewed by a $36-million litigation settlement, which breaks down to 44 cents per share.

Earnings per share came in at 41 cents, 4 cents better than the Zacks Consensus Estimate. Management held its annual forecast steady but remains encouraged by customer demand.

Estimate Keep Climbing

Forecasts for Sanmina-SCI just keep getting better. The Zacks Consensus Estimate for full-year 2011 is up 6 cents in the past 30 days to $1.68, on 8 upward estimates revisions. Next year's projections are averaging $2.03, up 7 cents.

In fiscal 2010 Sanmina-SCI made $1.17, making expected growth rates 44% for this year and another 21% in 2012.

Shares are on Sale

Just about any valuation metric you look at says that shares of SANM are trading at a nice discount. The forward P/E is in the single digits and the PEG is only 0.6.

What about the price to sales? Just 0.2 times. Shares are going for 1.7 times the book value. You normally wouldn't expect to see this kind of value in the top rated company, out of 6, in the 12th hottest industry, out of 264.

The Chart

Below you can see a nice jump that coincided with Intel's (INTC) because the chip giant said it expected to ramp up infrastructure spending. That could lead to a nice increase for Sanmina-SCI.

It has been a gradual recovery for SANM's estimates, but you can see a solid recovery in the chart below. Each colored line represents full-year consensus for a particular year. We are seeing solid year over year growth as well as upward revisions throughout the year.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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