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SANM Q4 Earnings Beat Estimates on AI Growth, Strong Execution
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Key Takeaways
Sanmina's fiscal Q4 earnings surged 165.3% to $4.43 per share, while revenues jumped 84% to $3.86 billion.
Cloud and AI infrastructure revenues soared 179% to $2.37 billion, fueled by robust demand and ZT Systems.
SANM projects fiscal 2027 revenues of $17.5-$19.5 billion backed by strong cloud and AI related demand.
Sanmina Corporation (SANM - Free Report) reported strong fourth-quarter fiscal 2026 results, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. Non-GAAP earnings came in at $4.43 per share, up 165.3% year over year and ahead of the consensus estimate of $3.27 by 35.47%. Revenues of $3.86 billion increased 84% year over year and exceeded the consensus estimate of $3.48 billion by 10.93%.
Sanmina Corporation Price, Consensus and EPS Surprise
Results reflected broad-based growth across core Sanmina, contributions from ZT Systems and a favorable business mix. Strong execution, cost discipline and tariff recoveries supported profitability. The book-to-bill ratio reached 1.22, indicating healthy order momentum.
SANM's Q4 Sales Surge on Broad-Based Demand
Core Sanmina revenues increased 41.9% year over year to $2.97 billion, exceeding management's outlook. Growth was supported by strong demand across all end markets and the maturation of new customer programs. ZT Systems contributed $884 million in revenues, in line with expectations.
Cloud and AI infrastructure, including communications networks, generated $2.37 billion in revenues, up 179% year over year. Industrial and energy, medical, defense and aerospace, and automotive and transportation businesses collectively generated $1.49 billion, reflecting 19% year-over-year growth.
Sanmina's Margins Expand on Mix and Cost Discipline
Non-GAAP gross profit increased to $444.4 million from $196.4 million a year earlier, while gross margin expanded 210 basis points (bps) to 11.5%. Favorable product mix, operating efficiencies and tariff recoveries supported profitability.
Non-GAAP operating expenses totaled $96.3 million, representing 2.5% of revenues. Non-GAAP operating income increased to $348.1 million from $126.5 million, with operating margin expanding 300 bps to 9%. Approximately $30 million in tariff recoveries contributed 75 bps to operating margin and 42 cents to adjusted earnings per share.
SANM's Segment Revenues Register Robust Growth
Integrated Manufacturing Solutions (IMS) revenues climbed 83.3% year over year to $3.08 billion, supported by growth across end markets and the ZT Systems contribution. Core IMS revenues reached approximately $2.2 billion. Non-GAAP gross margin improved 340 bps to 11.2%, driven primarily by favorable mix and tariff recoveries.
Components, Products and Services (CPS) revenues surged 83% year over year to $822 million. Growth reflected demand for Viking Enterprise Solutions storage products, AI system racks and aerospace and defense-related printed circuit boards. However, CPS non-GAAP gross margin contracted 250 basis points to 12%, reflecting unfavorable mix and depreciation and other expenses associated with capacity investments.
Sanmina Advances AI Platforms and Customer Expansion
Management highlighted continued progress in integrating ZT Systems and scaling the cloud and AI infrastructure business. Sanmina secured business for AMD's Helios accelerated compute platform from hyperscalers, frontier AI laboratories and original equipment manufacturers. Initial Helios shipments have commenced, supported by customer validation and preproduction activities.
The company also secured programs on a second accelerated compute platform, with production expected to ramp during fiscal 2027. Discussions regarding a third platform are progressing, although potential contributions remain excluded from guidance. Sanmina is expanding vertical integration opportunities through investments in liquid cooling, power infrastructure, advanced manufacturing and systems integration.
Sanmina ended fiscal 2026 with $1.68 billion in cash and cash equivalents and total available liquidity of $3.83 billion. Its net leverage ratio was 0.33X, while non-GAAP pretax return on invested capital reached 48.8%, compared with 28.3% a year earlier.
Fiscal fourth-quarter operating cash flow totaled $242 million, while free cash flow reached $83 million after capital expenditures of $159 million. The company repurchased approximately 825,000 shares for $154 million during the quarter. Full-year operating cash flow reached $944 million, reflecting disciplined working capital management.
Sanmina Issues Strong Fiscal 2027 Outlook
For the first quarter of fiscal 2027, management expects revenues between $3.8 billion and $4.1 billion, including cloud and AI systems revenues of $1.3-$1.5 billion. Non-GAAP operating margin is projected at 7-7.5%, while adjusted earnings are expected between $3.50 and $3.85 per share.
For fiscal 2027, Sanmina anticipates revenues of $17.5-$19.5 billion, with cloud and AI systems contributing $7.5-$9 billion. Non-GAAP operating margin is expected at 7-7.5%, while adjusted earnings are projected at $15.5-$17.5 per share. Management expects AI-related demand to accelerate in the second half, supported by the Helios ramp, additional platforms and vertical integration opportunities. Supply-chain constraints and the timing of complex program launches remain important execution considerations.
HubSpot continues to witness rising adoption among larger customers as businesses consolidate marketing, sales and service workflows on a unified AI-enabled platform. Management expects platform consolidation and AI adoption trends to remain key long-term growth drivers.
Ubiquiti Inc. (UI - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 22 %.
Ubiquiti spends significantly on research and development activities to develop innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.
Corning Incorporated (GLW - Free Report) currently carries a Zacks Rank #1. It delivered an earnings surprise of 1.94% in the trailing four quarters.
Corning’s competitive strength lies in its focus on innovation. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in its Optical Communication segment. Some of its businesses stand to benefit from government regulations. For example, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States.
View the Zacks #1 Rank List
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SANM Q4 Earnings Beat Estimates on AI Growth, Strong Execution
Key Takeaways
Sanmina Corporation (SANM - Free Report) reported strong fourth-quarter fiscal 2026 results, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. Non-GAAP earnings came in at $4.43 per share, up 165.3% year over year and ahead of the consensus estimate of $3.27 by 35.47%. Revenues of $3.86 billion increased 84% year over year and exceeded the consensus estimate of $3.48 billion by 10.93%.
Sanmina Corporation Price, Consensus and EPS Surprise
Sanmina Corporation price-consensus-eps-surprise-chart | Sanmina Corporation Quote
Results reflected broad-based growth across core Sanmina, contributions from ZT Systems and a favorable business mix. Strong execution, cost discipline and tariff recoveries supported profitability. The book-to-bill ratio reached 1.22, indicating healthy order momentum.
SANM's Q4 Sales Surge on Broad-Based Demand
Core Sanmina revenues increased 41.9% year over year to $2.97 billion, exceeding management's outlook. Growth was supported by strong demand across all end markets and the maturation of new customer programs. ZT Systems contributed $884 million in revenues, in line with expectations.
Cloud and AI infrastructure, including communications networks, generated $2.37 billion in revenues, up 179% year over year. Industrial and energy, medical, defense and aerospace, and automotive and transportation businesses collectively generated $1.49 billion, reflecting 19% year-over-year growth.
Sanmina's Margins Expand on Mix and Cost Discipline
Non-GAAP gross profit increased to $444.4 million from $196.4 million a year earlier, while gross margin expanded 210 basis points (bps) to 11.5%. Favorable product mix, operating efficiencies and tariff recoveries supported profitability.
Non-GAAP operating expenses totaled $96.3 million, representing 2.5% of revenues. Non-GAAP operating income increased to $348.1 million from $126.5 million, with operating margin expanding 300 bps to 9%. Approximately $30 million in tariff recoveries contributed 75 bps to operating margin and 42 cents to adjusted earnings per share.
SANM's Segment Revenues Register Robust Growth
Integrated Manufacturing Solutions (IMS) revenues climbed 83.3% year over year to $3.08 billion, supported by growth across end markets and the ZT Systems contribution. Core IMS revenues reached approximately $2.2 billion. Non-GAAP gross margin improved 340 bps to 11.2%, driven primarily by favorable mix and tariff recoveries.
Components, Products and Services (CPS) revenues surged 83% year over year to $822 million. Growth reflected demand for Viking Enterprise Solutions storage products, AI system racks and aerospace and defense-related printed circuit boards. However, CPS non-GAAP gross margin contracted 250 basis points to 12%, reflecting unfavorable mix and depreciation and other expenses associated with capacity investments.
Sanmina Advances AI Platforms and Customer Expansion
Management highlighted continued progress in integrating ZT Systems and scaling the cloud and AI infrastructure business. Sanmina secured business for AMD's Helios accelerated compute platform from hyperscalers, frontier AI laboratories and original equipment manufacturers. Initial Helios shipments have commenced, supported by customer validation and preproduction activities.
The company also secured programs on a second accelerated compute platform, with production expected to ramp during fiscal 2027. Discussions regarding a third platform are progressing, although potential contributions remain excluded from guidance. Sanmina is expanding vertical integration opportunities through investments in liquid cooling, power infrastructure, advanced manufacturing and systems integration.
SANM Generates Strong Cash Flow, Maintains Liquidity
Sanmina ended fiscal 2026 with $1.68 billion in cash and cash equivalents and total available liquidity of $3.83 billion. Its net leverage ratio was 0.33X, while non-GAAP pretax return on invested capital reached 48.8%, compared with 28.3% a year earlier.
Fiscal fourth-quarter operating cash flow totaled $242 million, while free cash flow reached $83 million after capital expenditures of $159 million. The company repurchased approximately 825,000 shares for $154 million during the quarter. Full-year operating cash flow reached $944 million, reflecting disciplined working capital management.
Sanmina Issues Strong Fiscal 2027 Outlook
For the first quarter of fiscal 2027, management expects revenues between $3.8 billion and $4.1 billion, including cloud and AI systems revenues of $1.3-$1.5 billion. Non-GAAP operating margin is projected at 7-7.5%, while adjusted earnings are expected between $3.50 and $3.85 per share.
For fiscal 2027, Sanmina anticipates revenues of $17.5-$19.5 billion, with cloud and AI systems contributing $7.5-$9 billion. Non-GAAP operating margin is expected at 7-7.5%, while adjusted earnings are projected at $15.5-$17.5 per share. Management expects AI-related demand to accelerate in the second half, supported by the Helios ramp, additional platforms and vertical integration opportunities. Supply-chain constraints and the timing of complex program launches remain important execution considerations.
Zacks Rank
Sanmina currently carries a Zacks Rank #2 (Buy).
Upcoming Releases
HubSpot (HUBS - Free Report) currently carries a Zacks Rank #2. It delivered an earnings surprise of 6.13% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HubSpot continues to witness rising adoption among larger customers as businesses consolidate marketing, sales and service workflows on a unified AI-enabled platform. Management expects platform consolidation and AI adoption trends to remain key long-term growth drivers.
Ubiquiti Inc. (UI - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 22 %.
Ubiquiti spends significantly on research and development activities to develop innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.
Corning Incorporated (GLW - Free Report) currently carries a Zacks Rank #1. It delivered an earnings surprise of 1.94% in the trailing four quarters.
Corning’s competitive strength lies in its focus on innovation. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in its Optical Communication segment. Some of its businesses stand to benefit from government regulations. For example, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States.