Sponsored Links 
Growth Slowing for Ingram Micro
Ingram Micro Inc.’s (IM - Analyst Report) first quarter sales were $246 million below our estimate, and its EPS were $0.01 below our estimate. The lower-than-expected results were due to continued weakness in North America and Europe. Also, management's EPS guidance for the second quarter was in-line with our estimate thanks to share repurchases. We think that Ingram Micro will be able to deliver solid operating leverage over the long term.
However, we believe the company could disappoint in the near term because of slowing economic growth in North America and Europe, as well as industry-wide pricing pressures. As a result, we are reducing our estimates for 2008 and 2009. The company expects sales of $8.50 billion to $8.75 billion and net income of $59 million to $64 million, $0.34 to $0.37 per diluted share. These estimates do not include costs related to the company's expense reduction plans.
Currently, Ingram Micro expects charges of $2-$4 million in the second quarter with $9-$11 million in the third quarter. Ingram Micro shares trade at 9.6x our 2008 EPS estimate and 8.9x our 2009 EPS estimate. While this valuation may appear cheap, we think it represents a fair value, relative to its peers and long-term earnings growth rate.
As a result, we think shares of IM will track the performance of the S&P 500 over the next six months. We maintain our Hold rating but lower our target price from $18 to $17.25. Our target price of $17.25 is 10x our 2008 EPS estimate.
Read the full analyst report on IM.
 |
 |
 Share |
 RSS |
 Rate Pos |
 Rate Neg |
 Comment |
|
|
||||||
Loading Stories...Related Content
- Free Four Zacks #1 Rank "Strong Buy" Stocks
- Free Timely Market Commentary
- Free Wealth Management Tips
- Free Profitable Strategy Screens
- Free Bull and Bear Stocks of the Day
2.23 %
More Zacks Resources
More Zacks Links
| Market Summary | Jul 31, 2010 13:11 pm ET |
-1.22
[CLICK TO CLOSE X]