Analyzing SMTC (SMTX) and Sanmina (SANM)

SMTC (NASDAQ:SMTX) and Sanmina (NASDAQ:SANM) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Insider & Institutional Ownership

16.3% of SMTC shares are owned by institutional investors. Comparatively, 93.2% of Sanmina shares are owned by institutional investors. 27.7% of SMTC shares are owned by company insiders. Comparatively, 5.1% of Sanmina shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

SMTC has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Sanmina has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares SMTC and Sanmina’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SMTC -0.07% -0.66% -0.17%
Sanmina -1.28% 10.24% 3.91%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for SMTC and Sanmina, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SMTC 0 0 0 0 N/A
Sanmina 0 1 3 0 2.75

Sanmina has a consensus target price of $35.75, indicating a potential upside of 40.58%. Given Sanmina’s higher possible upside, analysts plainly believe Sanmina is more favorable than SMTC.

Earnings and Valuation

This table compares SMTC and Sanmina’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SMTC $139.23 million 0.46 -$7.84 million N/A N/A
Sanmina $7.11 billion 0.24 -$90.93 million $1.84 13.82

SMTC has higher earnings, but lower revenue than Sanmina.

Summary

Sanmina beats SMTC on 6 of the 10 factors compared between the two stocks.

About SMTC

SMTC Corporation provides electronics manufacturing services worldwide. The company offers end-to-end electronics manufacturing services, including product design and engineering; printed circuit board assembly; production, enclosure, cable assembly, and precision metal fabrication; systems integration and testing; and configuration to order, build to order, and direct order fulfillment services. It provides integrated contract manufacturing services to original equipment manufacturers and technology companies primarily in the industrial, networking and communications, power and energy, and medical market sectors. SMTC Corporation was founded in 1985 and is headquartered in Markham, Canada.

About Sanmina

Sanmina Corporation provides integrated manufacturing solutions, components, products and repair, logistics, and after-market services worldwide. The company offers product design and engineering solutions, including concept development, detailed design, prototyping, validation, preproduction, and manufacturing design release; manufacturing solutions of components, subassemblies, and complete systems; final system assembly and test services; direct order fulfillment and logistics services; after-market product service and support; and supply chain management services. It also provides interconnect systems, such as printed circuit board fabrication, backplane, cable assemblies, and plastic injection moldings; mechanical systems comprising enclosures and precision machining; memory, radio frequency, optical, and microelectronic solutions; defense and aerospace products; storage solutions; and cloud-based manufacturing execution software. Sanmina Corporation offers its solutions primarily to original equipment manufacturers in the communications networks, computing and storage, multimedia, industrial and semiconductor capital equipment, defense and aerospace, medical, energy, and automotive industries. The company was formerly known as Sanmina-SCI Corporation and changed its name to Sanmina Corporation in November 2012. Sanmina Corporation was founded in 1980 and is headquartered in San Jose, California.

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