Sanmina Corporation (SANM): what the price assumes
In the published model solve dated 2026-Q2, anchored at $199.04, Sanmina Corporation (SANM) is priced for +16.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/SANM
Headline
| Field | Value |
|---|---|
| Ticker | SANM |
| Company | Sanmina Corporation |
| Current price | $199.05/sh |
| Composition | Industrial, Medical, Defense and Aerospace, and Automotive 62% / Communications Networks and Cloud Infrastructure 38% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 2.9% |
| Operating margin today | 4.2% |
| Margin compression (value-band) | -1.3pp |
| Implied growth | 16.5% |
| Multiple paid | 22x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.54σ |
| cohort percentile (of 187 peers) | 33 |
| sustained it ~5 years at this level | 48% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.93x | 5 | expensive |
| Earnings | 2.29x | 5 | expensive |
| Relative | 1.64x | 2 | expensive |
| Growth | 0.57x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $893.18 | 0.22x | yes | FCF base $0.9B, growth 25% (input: historical growth), terminal g 4.0%, WACC 7.6%, 7yr projection |
| DCF Exit Multiple | Growth | $346.70 | 0.57x | yes | Exit EV/EBITDA: 14.2x / 17.2x / 20.2x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | — | — | no | P/E 25.79x (blended: static sector reference 22x + trailing (TTM) 35x), scenarios: 20.6x / 25.8x / 30.9x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $62.15 | 3.20x | yes | BV/sh $51.49, ROE (TTM) 11.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $68.03 | 2.93x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $288.81 | 0.69x | yes | Rev $12.8B, growth 30% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 1.0x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $100.99 | 1.97x | yes | EPS $5.59, growth 18% (input: historical EPS growth), PEG=1.92 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $51.11 | 3.89x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.41B × (1−35%) / WACC 7.6% → EPV (no growth) |
| Residual Income | Asset | $69.17 | 2.88x | yes | BV $51.49 + 5yr PV of (ROE (TTM) 11.2% − Kₑ 9.3%) × BV; BV grows 7.3%/yr |
| Graham Number | Asset | $80.47 | 2.47x | yes | √(22.5 × EPS $5.59 × BVPS $51.49) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.67B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $104.86 | 1.90x | yes | FCF $594.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $86.96 | 2.29x | yes | SBC-adj FCF $0.51B (FCF $0.59B − SBC $0.09B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $180.37 | 1.10x | yes | EPS $5.59 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $27.60 | 7.21x | yes | BV $51.49 × (ROIC 4.1% / WACC 7.6%) |
| P/Sales Sector | Relative | — | — | no | Revenue $12.76B × sector P/S 5.0x |
| PEG Fair Value | Relative | $151.48 | 1.31x | yes | EPS $5.59 × (PEG 1.5 × growth 18.1% (input: historical EPS growth)) → PE 27.1x |
| Earnings Yield | Earnings | $60.43 | 3.29x | yes | EPS $5.59 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Integrated Manufacturing Solutions (IMS) | operating | enterprise | $6.5b | — | withheld | unresolved no unit value |
| Components, Products and Services (CPS) | operating | enterprise | $1.6b | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $542.4m |
| Net debt / NOPAT (after-tax) | 1.57x |
| Net debt / operating income (pre-tax) | 1.02x |
| Interest coverage | 5.6x |
| Share count CAGR (buyback) | -2.8% |
| Burning cash | no |
Bullet Takeaways
- The trajectory just changed shape: second-quarter fiscal 2026 revenue roughly doubled year over year to about $4.01 billion, driven by the ZT Systems acquisition that lifted cloud and AI infrastructure to about 63% of revenue. Core Sanmina grew 7.3%.
- This is a thin-margin contract manufacturer (trailing operating margin 3.6%) being repriced as an AI-infrastructure beneficiary. The price is paying for durable compounding the static frames cannot capture, which is also the assumption most at risk.
Bull Case
The earnings trajectory has inflected, and the direction is the entire bull case. Second-quarter fiscal 2026 revenue reached about $4.01 billion, up roughly 102% year over year, with non-GAAP diluted EPS of $3.16 well ahead of forecasts (web research). The step change came from ZT Systems, the accelerated-compute business Sanmina acquired from AMD, which pulled forward shipments and lifted exposure to communications networks and cloud and AI infrastructure to about 63% of revenue, while core Sanmina still grew 7.3% (web research). A contract manufacturer that has historically grown low single digits is now compounding at a rate set by AI infrastructure demand, and the mix shift toward cloud and AI is the highest-value end market it serves.
Margins are moving with the revenue, which is what separates profitable scale from empty volume. IMS non-GAAP gross margin improved to 8.7%, up 80 basis points, on favorable product mix and operational efficiencies including the ZT contribution, and full-year fiscal 2026 guidance calls for a non-GAAP operating margin of 6.3% to 6.6% on revenue of $13.7 billion to $14.3 billion with EPS of $10.75 to $11.35 (web research). For a business whose trailing operating margin sat near 3.6%, that is a meaningful step up, and the company raised guidance and signaled it is positioned to deliver $16 billion or more in fiscal 2027 (web research). Free cash flow is real here too, about $734 million trailing, and the FCF-yield method marks $126, so the cash generation is not a projection.
The capital allocation supports the trajectory rather than diluting it. Sanmina approved a $600 million buyback and has been shrinking its share count about 3.8% a year, so the AI-driven earnings growth accrues to fewer shares (web research). The balance sheet carries net debt of about $768 million against roughly $405 million of operating income and 6x interest coverage, manageable for an integrated manufacturer with $1.6 billion of liquid assets. The 10-K frames the strategy plainly, that the company "continually seek[s] to identify and undertake strategic transactions" to grow "by accessing new customers' products, manufacturing solutions" and capabilities (accession 0000897723-25-000042), and ZT Systems is exactly that strategy delivering. The growth-DCF family is the only one reaching the price precisely because the price is paying for this newly durable compounding.
Bear Case
The most fragile assumption in the price is that the AI-infrastructure surge is durable rather than a pull-forward. The valuation needs operating growth held near its self-funding ceiling for about seven years, and the entire premium rests on the ZT Systems and accelerated-compute revenue that doubled the top line in a single year. That revenue is concentrated, cyclical, and tied to the capital-spending plans of a handful of hyperscale and AI customers. Management itself noted that shipments expected in the second half shifted into the second quarter, which is the language of demand timing, not steady-state run-rate. If hyperscaler capital spending normalizes or a major customer in-sources, the growth rate the price assumes collapses toward the low-single-digit history, and a 33x multiple on a thin-margin manufacturer has a long way to fall.
The business is structurally low-margin and low-return, which the static frames capture and the price ignores. Trailing operating margin is about 3.6%, return on equity is 9.9% against a 9.3% cost of equity, and return on invested capital is only 3.2%. Those are commodity-manufacturing economics. Contract electronics manufacturing is intensely competitive: the 10-K acknowledges competitors "in each of our key end markets" including "companies that are much larger than we are" (accession 0000897723-25-000042), and peers like Celestica describe the same race for the same AI and cloud customers, who carry "more significant concentration with major customers" (accession 0001030894-26-000011). When the customer is a giant and the service is assembly, pricing power sits with the customer, and the margin gains can reverse as fast as they arrived.
The valuation gap quantifies the risk. Earnings-power value marks $47, the excess-return and residual-income methods $51 to $53, the Graham number $71, and even the FCF-yield method only $126, all far below the $241 price (June 28, 2026). The price embeds a moat-and-durability premium that an assembly business does not obviously possess, and only about 22% of comparable fast-growers historically sustained the assumed pace for even seven years. The bet is that ZT Systems permanently re-rated Sanmina into a structurally higher-growth, higher-margin company. If instead it was a cyclical surge layered on a commodity base, the static frames, not the growth-DCF, will prove the honest read.
Valuation
The price is read on a whole-company basis against operating income. At roughly 33x company-wide operating income, the inversion solves to operating growth held near the 25% self-funding ceiling for about seven years, computed at a 9.4% cost of capital. The near-term pace is within what Sanmina has just delivered, so the stretch is duration: the price needs the AI-infrastructure growth to persist for years, and only about 22% of comparable companies sustained that kind of pace for seven years.
The X-ray is lopsided, and the characterization names why: asset, earnings-power, and peer-multiple methods all read richly valued, and only the growth-DCF family reaches the price. The asset family marks $51 to $53 against a $47.39 book value, earnings-power value is $47, the Graham number $71, FCF yield $126, and the relative P/E method $167. The growth methods, by contrast, mark $350 to $895 because they extrapolate the recent 25%-plus growth, which is what pulls the consensus up.
The honest read is that this is a thin-margin contract manufacturer trading at a growth multiple because one acquisition reshaped its end-market mix toward AI. The variable that settles the valuation is durability: whether ZT Systems and accelerated compute represent a permanent step up in growth and margin, which would justify the growth-DCF marks, or a cyclical pull-forward, in which case the asset and earnings-power floors near $50 to $96 are the more honest anchor.
Catalysts
The defining catalyst is the ZT Systems integration and the AI-infrastructure ramp. Second-quarter fiscal 2026 revenue roughly doubled to about $4.01 billion with non-GAAP EPS of $3.16, as ZT Systems revenue exceeded expectations and pulled second-half shipments forward, lifting cloud and AI infrastructure to about 63% of revenue while core Sanmina grew 7.3% (web research). The pace of ZT and accelerated-compute shipments, and whether the pull-forward sustains, is the single most important number to track.
Guidance and capital returns are the supporting catalysts. The company raised full-year fiscal 2026 revenue guidance to $13.7 billion to $14.3 billion with non-GAAP operating margin of 6.3% to 6.6% and EPS of $10.75 to $11.35, signaled a path to $16 billion or more in fiscal 2027, and approved a $600 million buyback (web research). IMS non-GAAP gross margin improved to 8.7%, up 80 basis points, so the margin trajectory is the readout on whether the AI mix is structurally more profitable.
The risk catalyst is customer and end-market concentration. With AI and cloud now nearly two-thirds of revenue, hyperscaler capital-spending decisions and any shift by a major customer are the events that would move the thesis most. Watch quarterly AI-infrastructure revenue, the operating-margin trend, the buyback pace, and the breadth of the customer base behind the growth.
Sources: Sanmina second quarter fiscal 2026 results (ir.sanmina.com, prnewswire.com, sec.gov 8-K); Sanmina Q2 FY2026 analysis (investing.com, stockstory.org, simplywall.st); Sanmina earnings coverage (theglobeandmail.com).
Peer Cohorts (Per Segment, With Filing Citations)
Integrated Manufacturing Solutions (IMS) (reported)
- CLS (CELESTICA INC.)
- FY2025 10-K: …as well as more significant concentration with major customers. We engage with customers in our capacity as an original design manufacturer (ODM) and electronics manufacturing services (EMS) provider, as well as offering various software solutions and services. Within our CCS segment, our HPS business, which is…
- FY2025 10-K: …(OEMs) and enterprise customers. Customers in our ATS segment include OEMs in a range of diversified markets that we serve. We offer a comprehensive range of products and services that cover the entire technology product lifecycle, including hardware design and development, new product introduction, engineering…
- JBL (JABIL INC)
- FY2025 10-K: …operating segments is included in Item 7 of this report and Note 14 - "Concentration of Risk and Segment Data" to the Consolidated Financial Statements. Industry Background Our industry was historically composed of companies that provide a range of design and manufacturing services to companies that utilize…
- FY2025 10-K: …buyers, planners, and engineers to provide comprehensive, customized manufacturing solutions. We believe our customer-centric business units promote increased responsiveness, particularly for relationships that extend across multiple production locations. • Leverage Global Production. We believe that global…
- FLEX (FLEX LTD.)
- FY2025 10-K: ("Flex" or the "Company") is the advanced, end-to-end manufacturing partner of choice that helps a diverse customer base design, build, deliver and manage innovative products that improve the world. Through the collective strength of a global workforce across approximately 30 countries with responsible, sustainable…
- FY2025 10-K: …that incorporate printed circuit boards and complex electromechanical components. We assemble electronic products with custom electronic enclosures on either a build-to-order or configure-to-order basis. As customers seek to provide greater functionality in physically smaller products, they increasingly require more…
- PLXS (PLEXUS CORP.)
- FY2025 10-K: …results, including our return on invested capital. In addition, we provide managed inventory programs for some of our customers under which we hold and manage finished goods or work-in-process inventories. These managed inventory programs may result in higher inventory levels, further reduce our inventory turns and…
- FY2025 10-K: …oversee and provide leadership to business development and customer relationship management teams, supply chain, engineering, manufacturing and sustaining services subject matter experts and market sector specialists. These teams maintain expertise related to each market sector and execute sector strategies aligned…
- BHE (BENCHMARK ELECTRONICS, INC.)
- FY2025 10-K: …machining (PMM) services. We support customers throughout their product lifecycle starting from initial product concept through volume production, including the ability to manage direct order fulfillment and provide aftermarket services. We are a trusted partner to our European and U.S. based national and…
- FY2025 10-K: …to OEMs, which pay for and own the resulting designs. Our ability to provide these solutions allows us to capitalize on OEMs' increasing needs for custom manufacturing solutions, which in turn provides an additional opportunity for us to introduce these customers to our comprehensive manufacturing services. 5 Supply…
- TTMI (TTM TECHNOLOGIES INC)
- FY2025 10-K: …and to enable them to reduce the time required to develop new products and bring them to market. We serve a diversified customer base consisting of approximately 1,300 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial, and…
- FY2025 10-K: …one-stop solution for customers. We are one of the largest technology manufacturers in North America and have a global sales and manufacturing presence. We believe we have significant economies of scale, an increasing end-to-end value chain solution for customers, a regionally diversified and resilient manufacturing…
Components, Products and Services (CPS) (reported)
- TTMI (TTM TECHNOLOGIES INC)
- FY2025 10-K: …components, assemblies, and subsystems. Orders for products generally correspond to the production schedules of our customers and are supported with firm purchase orders. Our customers have continuous control of the work in progress and finished goods throughout the PCB and engineered systems manufacturing process,…
- FY2025 10-K: …and other PCB assemblies, primary raw materials are manufactured components such as PCBs, ceramic and ferrite substrates, connectors, capacitors, resistors, diodes, and integrated circuits, many of which are custom made and sourced from customer-approved vendors. The more complicated RF subsystems require integrated…
- PLXS (PLEXUS CORP.)
- FY2025 10-K: …and trade protection measures, terrorism, armed conflict, natural disasters, natural resource availability, economic recession, increased demand due to economic growth or technological advancements, preferential allocations, transportation challenges, and other localized events. Further, we rely on a limited number…
- FY2025 10-K: …oversee and provide leadership to business development and customer relationship management teams, supply chain, engineering, manufacturing and sustaining services subject matter experts and market sector specialists. These teams maintain expertise related to each market sector and execute sector strategies aligned…
- BHE (BENCHMARK ELECTRONICS, INC.)
- FY2025 10-K: …machining (PMM) services. We support customers throughout their product lifecycle starting from initial product concept through volume production, including the ability to manage direct order fulfillment and provide aftermarket services. We are a trusted partner to our European and U.S. based national and…
- FY2025 10-K: …to OEMs, which pay for and own the resulting designs. Our ability to provide these solutions allows us to capitalize on OEMs' increasing needs for custom manufacturing solutions, which in turn provides an additional opportunity for us to introduce these customers to our comprehensive manufacturing services. 5 Supply…
- FN (FABRINET)
- FY2025 10-K: ' opportunity to sell shares at a premium. • Our shareholders may face difficulties in protecting their interests because we are incorporated under Cayman Islands law. • Certain judgments obtained against us by our shareholders may not be enforceable. • Energy price volatility may negatively impact our business,…
- FY2025 10-K: …energy prices, a significant increase is possible, which could increase our raw material and transportation costs. In addition, increased transportation costs of our suppliers and customers could be passed along to us. We may not be able to increase our prices to adequately offset these increased costs, and any…
- JBL (JABIL INC)
- FY2025 10-K: …operating segments is included in Item 7 of this report and Note 14 - "Concentration of Risk and Segment Data" to the Consolidated Financial Statements. Industry Background Our industry was historically composed of companies that provide a range of design and manufacturing services to companies that utilize…
- FY2025 10-K: …in which an activity takes place. We believe that the principal competitive factors in the manufacturing services market are: cost; accelerated production time-to-market; higher efficiencies; global locations; rapid scaling of production; advanced technologies; quality; and improved pricing of components. We believe…
- FLEX (FLEX LTD.)
- FY2025 10-K: …and Cloud , including data center, edge, and communications infrastructure • Lifestyle , including appliances, floorcare, smart living, HVAC, and power tools • Consumer Devices , including mobile and high velocity consumer devices. The FRS segment is optimized for longer product lifecycles requiring complex ramps…
- FY2025 10-K: …major technology transitions such as compute and power, as well as specialized capabilities across the product lifecycle, such as mechanicals, plastics, and advanced printed circuit board assembly ("PCBA"). The Company's design and engineering services help customers de-risk technology adoption, develop products from…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.