Are Investors Undervaluing Sanmina (SANM) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Sanmina (SANM) is a stock many investors are watching right now. SANM is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 17.12, which compares to its industry's average of 18.83. Over the past year, SANM's Forward P/E has been as high as 18.20 and as low as 10.26, with a median of 12.95.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SANM has a P/S ratio of 0.79. This compares to its industry's average P/S of 0.98.

Finally, investors will want to recognize that SANM has a P/CF ratio of 16.93. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. SANM's P/CF compares to its industry's average P/CF of 21.53. Within the past 12 months, SANM's P/CF has been as high as 17.73 and as low as 10.27, with a median of 12.92.

These are only a few of the key metrics included in Sanmina's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SANM looks like an impressive value stock at the moment.

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

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