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SANM Rides on Steady Cash Flow: Will the Momentum Persist?
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Key Takeaways
Sanmina's operating cash flow rose to $178.7M in Q1 FY26 from $63.9M a year ago, with free cash flow at $92M.
SANM revenues surged 59% YoY to $3.19B, driven by AI hardware demand and growth in Communications Networks.
SANM benefits from strong liquidity, disciplined capex and operational efficiency supporting cash flow.
Sanmina Corporation (SANM - Free Report) generated $178.7 million cash flow from operations in the first quarter of fiscal 2026 compared with $63.9 million in the year-ago quarter. Free cash flow totaled $92 million, while capital spending was $87 million during the quarter.
There are several drivers of Sanmina’s strong cash flow growth. Sanmina is benefiting from solid demand in the Communications Networks Cloud & AI Infrastructure verticals. During the first quarter, revenues from this end market rose to $1.96 billion from $0.73 billion a year ago. Total revenues came in at $3.19 billion, up 59% year over year. AI-driven hardware demand and the addition of the ZT Systems business are major growth drivers.
Strong operational execution and improvement in working capital management are other major contributors to cash flow growth. During the quarter, the company’s inventory reduction was $179.4 million, while receivable collections were $39.8 million. These two positive contributors outweighed the outflow of $84.2 million in accounts payable payments to suppliers. The company also received customer advances of $827 million for raw materials related to manufacturing. This has also improved working capital and supported cash flow growth.
Moreover, Sanmina’s strong liquidity and balance sheet management also support cash flow. Substantial liquidity of $3.6 billion, including cash and cash equivalents and other credit facilities, provides the necessary financial flexibility to continue investment in growth initiatives. Management’s focus on operational efficiency, disciplined capex, working capital optimization, and strong balance sheet management will likely support the cash flow growth.
How Are Competitors Faring?
The company faces competition from Jabil, Inc. (JBL - Free Report) and Celestica Inc. (CLS - Free Report) in the Electronics Manufacturing Services industry. In the first quarter of fiscal 2026, Jabil generated $323 million of net cash from operating activities compared to $312 million a year ago. Free cash flow stands at $272 million compared to $226 million a year ago. The company’s free cash flow was $1.3 billion in fiscal 2025, and Jabil remains committed to generating more than $1.3 billion in free cash flow in fiscal 2025. A higher free cash flow indicates efficient financial management practices, optimum utilization of assets and improved operational efficiency.
In the reported quarter, Celestica generated an operating cash flow of $250.6 million compared with $143.4 million in the year-ago quarter, bringing the respective tallies for 2025 and 2024 to $659.5 million and $473.9 million. Free cash flow was $155.9 million, up 62.7% year over year. This accentuates efficient capital management and implies that Celestica is well-positioned to invest in growth initiatives, as well as pay debt and dividends. Total revenues in the Connectivity & Cloud Solutions (CCS) segment improved 64% year over year to $2.86 billion, primarily driven by strong demand in the Communications end market. This has also supported the top-line growth.
SANM's Price Performance, Valuation & Estimates
Sanmina shares have surged 69.7% compared with the industry’s growth of 114.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, the company’s shares currently trade at 11.56 times forward 12-month earnings, lower than the industry.
Image Source: Zacks Investment Research
Earnings estimates for Sanmina for 2025 and 2026 have increased over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
SANM Rides on Steady Cash Flow: Will the Momentum Persist?
Key Takeaways
Sanmina Corporation (SANM - Free Report) generated $178.7 million cash flow from operations in the first quarter of fiscal 2026 compared with $63.9 million in the year-ago quarter. Free cash flow totaled $92 million, while capital spending was $87 million during the quarter.
There are several drivers of Sanmina’s strong cash flow growth. Sanmina is benefiting from solid demand in the Communications Networks Cloud & AI Infrastructure verticals. During the first quarter, revenues from this end market rose to $1.96 billion from $0.73 billion a year ago. Total revenues came in at $3.19 billion, up 59% year over year. AI-driven hardware demand and the addition of the ZT Systems business are major growth drivers.
Strong operational execution and improvement in working capital management are other major contributors to cash flow growth. During the quarter, the company’s inventory reduction was $179.4 million, while receivable collections were $39.8 million. These two positive contributors outweighed the outflow of $84.2 million in accounts payable payments to suppliers. The company also received customer advances of $827 million for raw materials related to manufacturing. This has also improved working capital and supported cash flow growth.
Moreover, Sanmina’s strong liquidity and balance sheet management also support cash flow. Substantial liquidity of $3.6 billion, including cash and cash equivalents and other credit facilities, provides the necessary financial flexibility to continue investment in growth initiatives. Management’s focus on operational efficiency, disciplined capex, working capital optimization, and strong balance sheet management will likely support the cash flow growth.
How Are Competitors Faring?
The company faces competition from Jabil, Inc. (JBL - Free Report) and Celestica Inc. (CLS - Free Report) in the Electronics Manufacturing Services industry. In the first quarter of fiscal 2026, Jabil generated $323 million of net cash from operating activities compared to $312 million a year ago. Free cash flow stands at $272 million compared to $226 million a year ago. The company’s free cash flow was $1.3 billion in fiscal 2025, and Jabil remains committed to generating more than $1.3 billion in free cash flow in fiscal 2025. A higher free cash flow indicates efficient financial management practices, optimum utilization of assets and improved operational efficiency.
In the reported quarter, Celestica generated an operating cash flow of $250.6 million compared with $143.4 million in the year-ago quarter, bringing the respective tallies for 2025 and 2024 to $659.5 million and $473.9 million. Free cash flow was $155.9 million, up 62.7% year over year. This accentuates efficient capital management and implies that Celestica is well-positioned to invest in growth initiatives, as well as pay debt and dividends. Total revenues in the Connectivity & Cloud Solutions (CCS) segment improved 64% year over year to $2.86 billion, primarily driven by strong demand in the Communications end market. This has also supported the top-line growth.
SANM's Price Performance, Valuation & Estimates
Sanmina shares have surged 69.7% compared with the industry’s growth of 114.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, the company’s shares currently trade at 11.56 times forward 12-month earnings, lower than the industry.
Image Source: Zacks Investment Research
Earnings estimates for Sanmina for 2025 and 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
Sanmina currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.