Ingram Micro (INGM): Evaluating Valuation After Strong Earnings, Dividend Boost, and New AI Initiatives

Ingram Micro Holding (INGM) sparked attention after posting its third quarter results, which showed higher sales and net income along with a raised dividend. The company’s upbeat guidance and new AI initiatives also fueled renewed interest among investors.

See our latest analysis for Ingram Micro Holding.

Momentum has picked up for Ingram Micro Holding, with a 17.7% share price return over the past 90 days as investors took notice of the company’s strong earnings, digital innovations, and dividend hike. However, it is worth noting that the total shareholder return for the past year is still down 6.4%, reflecting lingering concerns and recent volatility.

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With shares recently rebounding and analysts suggesting further upside, the key question now is whether Ingram Micro is trading at an attractive valuation or if the market has already factored in all the company’s future growth potential.

Price-to-Earnings of 18: Is it justified?

Ingram Micro Holding currently trades at a price-to-earnings (P/E) ratio of 18, which positions the stock below the US electronic industry’s average but above the peer group average. The stock’s last close was $22.23, and this valuation suggests that investors may be paying a premium relative to its closest peers, but not compared to the broader sector.

The P/E ratio measures how much investors are willing to pay for each dollar of earnings, making it one of the most widely referenced multiples for technology distributors like Ingram Micro. It reflects anticipated growth and profit quality, signaling market expectations for future performance.

While Ingram Micro’s 18x P/E is below the industry’s 25x average, which points to potential undervaluation when compared across the sector, it does look elevated versus the peer group’s 16.3x. However, when held against the estimated fair price-to-earnings ratio of 33.1x, the market appears to be assigning a conservative valuation. This gap suggests room for upward multiple expansion if the company's growth trajectory and profit recovery continue to meet or exceed forecasts.

Explore the SWS fair ratio for Ingram Micro Holding

Result: Price-to-Earnings of 18 (UNDERVALUED)

However, risks remain if earnings momentum falters or if industry competition intensifies. Both of these factors could put pressure on future returns and growth expectations.

Find out about the key risks to this Ingram Micro Holding narrative.

Another View: What Does the DCF Model Say?

While the price-to-earnings ratio hints at potential undervaluation, our DCF model takes a different approach by estimating the company’s fair value based on cash flow forecasts. This model suggests Ingram Micro may be trading below its true worth. However, how reliable is this outlook compared to market sentiment?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Ingram Micro Holding for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 840 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Ingram Micro Holding Narrative

If you see things differently or want to dive into the numbers yourself, you can build a custom story about Ingram Micro Holding in just a few minutes. Do it your way

A great starting point for your Ingram Micro Holding research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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