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Sanmina's Cash Flow Gains Momentum: Can the Trend Continue?
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Key Takeaways
Sanmina's operating cash flow jumped to $702 million in the first nine months of fiscal 2026.
AI infrastructure demand drove a 62% revenue uptick in communications networks and cloud.
Rising production investments and exposure to tariffs could challenge Sanmina's cash flow growth.
Sanmina Corporation (SANM - Free Report) generated $702 million in cash from operations in the first nine months of fiscal 2026 compared to $421.6 million in the year-ago period. Free cash flow also increased to $457.8 million from $341.4 million in the prior-year period, despite higher capital expenditures. In the third quarter, the company reported a cash flow of $124.5 million in cash flow from operations.
Strong performance in the AI infrastructure vertical remains an important growth catalyst. During the third quarter, Sanmina generated $2.15 billion in revenues in the communications networks and cloud and AI infrastructure domain. The 173.2% uptick was driven by demand for accelerated computing, storage, high-performance networking, switching, routing and optical systems. The integration of ZT Systems further strengthens this opportunity. Sanmina has secured additional orders for next-generation accelerated-compute products from hyperscale and OEM customers.
However, it is to be noted that strong operating cash flow will automatically translate into equally strong free cash flow. Sanmina's ongoing investments in production capabilities and capacity to support anticipated demand could impact free cash flow generation in the near term.
The company expects that the current investment cycle could eventually translate into stronger financial returns. However, there are several factors that can challenge Sanmina’s cash flow growth. The company remains exposed to changes in tariffs and trade policy and customer concentration risks. These factors could impact its commercial prospects and cash flow growth.
How Are the Competitors Faring?
The company faces competition from Jabil, Inc. (JBL - Free Report) and Celestica Inc. (CLS - Free Report) in the Electronics Manufacturing Services industry. Jabil generated $1.27 billion in cash from operations in the first nine months of fiscal 2026, up 20.6% from $1.05 billion in the year-ago period. Adjusted free cash flow also increased to $991 million from $813 million. Jabil expects adjusted free cash flow of more than $1.4 billion in fiscal 2026, above its prior outlook, supported by higher profitability, expanding margins and efficient capital spending.
Celestica generated $767.2 million in operating cash flow during the first six months of 2026, up sharply from $282.7 million a year earlier. Its free cash flow rose to $285 million from $213.5 million. This accentuates efficient capital management and implies that the company is well-positioned to invest in growth initiatives, as well as pay debt and dividends.
SANM's Price Performance, Valuation & Estimates
Sanmina shares have surged 67.6% compared with the industry’s growth of 43.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, the company’s shares currently trade at 14.86 times forward 12-month earnings, lower than the industry.
Image Source: Zacks Investment Research
Earnings estimates for Sanmina for 2026 and 2027 have increased over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Sanmina's Cash Flow Gains Momentum: Can the Trend Continue?
Key Takeaways
Sanmina Corporation (SANM - Free Report) generated $702 million in cash from operations in the first nine months of fiscal 2026 compared to $421.6 million in the year-ago period. Free cash flow also increased to $457.8 million from $341.4 million in the prior-year period, despite higher capital expenditures. In the third quarter, the company reported a cash flow of $124.5 million in cash flow from operations.
Strong performance in the AI infrastructure vertical remains an important growth catalyst. During the third quarter, Sanmina generated $2.15 billion in revenues in the communications networks and cloud and AI infrastructure domain. The 173.2% uptick was driven by demand for accelerated computing, storage, high-performance networking, switching, routing and optical systems. The integration of ZT Systems further strengthens this opportunity. Sanmina has secured additional orders for next-generation accelerated-compute products from hyperscale and OEM customers.
However, it is to be noted that strong operating cash flow will automatically translate into equally strong free cash flow. Sanmina's ongoing investments in production capabilities and capacity to support anticipated demand could impact free cash flow generation in the near term.
The company expects that the current investment cycle could eventually translate into stronger financial returns. However, there are several factors that can challenge Sanmina’s cash flow growth. The company remains exposed to changes in tariffs and trade policy and customer concentration risks. These factors could impact its commercial prospects and cash flow growth.
How Are the Competitors Faring?
The company faces competition from Jabil, Inc. (JBL - Free Report) and Celestica Inc. (CLS - Free Report) in the Electronics Manufacturing Services industry. Jabil generated $1.27 billion in cash from operations in the first nine months of fiscal 2026, up 20.6% from $1.05 billion in the year-ago period. Adjusted free cash flow also increased to $991 million from $813 million. Jabil expects adjusted free cash flow of more than $1.4 billion in fiscal 2026, above its prior outlook, supported by higher profitability, expanding margins and efficient capital spending.
Celestica generated $767.2 million in operating cash flow during the first six months of 2026, up sharply from $282.7 million a year earlier. Its free cash flow rose to $285 million from $213.5 million. This accentuates efficient capital management and implies that the company is well-positioned to invest in growth initiatives, as well as pay debt and dividends.
SANM's Price Performance, Valuation & Estimates
Sanmina shares have surged 67.6% compared with the industry’s growth of 43.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, the company’s shares currently trade at 14.86 times forward 12-month earnings, lower than the industry.
Image Source: Zacks Investment Research
Earnings estimates for Sanmina for 2026 and 2027 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.