• If you are wondering whether Sanmina shares are still worth considering after a strong run, this article will walk through what the current price could mean for underlying value.
• The stock trades at US$145.81 after a 2.7% decline over the last 7 days and a 12.7% decline over the last 30 days, while the 1 year return sits at 62.6% and the 3 year return at 129.5%.
• Recent attention on Sanmina has been driven by ongoing interest in electronics manufacturing services and how companies in this space are positioned within global supply chains. This backdrop has kept investors focused on how resilient Sanmina's business model and customer relationships may be over time.
• Sanmina currently holds a valuation score of 2 out of 6. Next, we will look at what different valuation methods say about that score, before finishing with a way to tie all these numbers into a clearer big picture.

Sanmina scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Sanmina Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and then discounting those back to a present value.

For Sanmina, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve month free cash flow of about $552.7 million. Analysts provide free cash flow estimates up to 2027, then Simply Wall St extrapolates further. The projections run out to 2035, with forecast free cash flow in 2027 of $253 million and an estimated $329.9 million in 2035, all in dollar terms. Each of these future figures is discounted back so they can be compared on a like for like basis today.

Putting those projections together, the DCF model arrives at an estimated intrinsic value of $76.65 per share. Compared with the current share price of US$145.81, this implies the stock is 90.2% overvalued based on this set of cash flow assumptions.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Sanmina may be overvalued by 90.2%. Discover 53 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Sanmina Price vs Earnings

For a profitable business like Sanmina, the P/E ratio is a useful way to relate what you pay for each share to the company’s earnings. It helps you see how many dollars investors are currently paying for one dollar of earnings.

What counts as a “normal” P/E depends on what investors expect for future growth and how much risk they see in the company and its sector. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth expectations or higher risk usually point to a lower P/E.

Sanmina currently trades on a P/E of 34.59x, compared with the Electronic industry average of 27.07x and a peer group average of 80.05x. Simply Wall St’s Fair Ratio framework estimates what a more tailored P/E might look like, at 39.01x, given Sanmina’s earnings profile, industry, profit margins, market value and risk factors. This Fair Ratio aims to be more specific than a simple comparison with peers or the broad industry because it adjusts for company level characteristics rather than relying on blunt averages.

Comparing 34.59x to the Fair Ratio of 39.01x suggests Sanmina’s current P/E is lower than what this model implies.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Sanmina Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives to attach your own story about Sanmina to the numbers by setting assumptions for future revenue, earnings and margins. You can then link that story to a financial forecast and fair value estimate that you can compare with the current share price to help decide when to buy or sell. The Narrative updates automatically when new earnings or news arrive. One investor might build a bullish Sanmina Narrative around a fair value near US$197.50 based on higher future P/E and growth expectations. Another could take a more cautious view with a lower fair value that places more weight on risks around customer concentration, execution on acquisitions and sensitivity to discount rates and margins.

Do you think there's more to the story for Sanmina? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.