Is Sanmina (SANM) Quietly Recasting Its Industrial Identity With This Houston Grid Factory Bet?

• Sanmina Corporation recently announced a major expansion of its Energy business, including a new Houston, Texas factory focused on the US energy market that will produce medium-voltage distribution transformers, instrument transformers and switchgear, with production targeted to begin in 2027 and initial customer commitments already secured.
• At the same time, Sanmina revealed a collaboration with Croatia-based Končar - Electrical Industry Inc. to co-design a custom medium-voltage transformer and explore broader joint opportunities to support Končar’s growth plans in the US market, signaling a deeper push into grid-level energy infrastructure manufacturing.
• We’ll now examine how Sanmina’s planned Houston factory for medium-voltage transformers could reshape the company’s broader investment narrative and growth profile.

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Sanmina Investment Narrative Recap

To own Sanmina, you need to believe it can convert its electronics manufacturing expertise into durable earnings growth across data center, industrial and now grid-level energy infrastructure, while managing customer concentration and execution risks around ZT Systems and new facilities. The Houston transformer plant supports that thesis but also likely adds to near term free cash flow pressure, reinforcing that the most important short term catalyst remains successful integration and ramp of the ZT Systems acquisition, while the biggest immediate risk is overextension across multiple complex build outs at once.

Among recent announcements, the up to US$3,500,000,000 credit agreement tied to the ZT Systems acquisition stands out, because it underpins Sanmina’s largest expected revenue catalyst at a time when the company is also committing capital to the Houston expansion. For shareholders, the balance between funding large AI and data center programs and absorbing the cash and execution demands of the new Energy footprint will be central to how the story plays out over the next few years.

Yet investors should also be aware that concentration in a handful of large customers could amplify any missteps in...

Read the full narrative on Sanmina (it's free!)

Sanmina's narrative projects $9.7 billion revenue and $375.6 million earnings by 2028. This requires 6.4% yearly revenue growth and roughly a $116 million earnings increase from $259.2 million today.

Uncover how Sanmina's forecasts yield a $190.00 fair value, a 29% upside to its current price.

Exploring Other Perspectives

Three Simply Wall St Community valuations span roughly US$32 to US$224 per share, showing how far apart individual views on Sanmina can be. Against that spread, the planned ZT Systems acquisition and related execution risk could have very different implications for future performance in the eyes of different investors, so it makes sense to review several of these perspectives before deciding how you see the stock.

Explore 3 other fair value estimates on Sanmina - why the stock might be worth as much as 52% more than the current price!

Build Your Own Sanmina Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Sanmina research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Sanmina research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Sanmina's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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