SGMA Stock: What Is Going on With Red-Hot SigmaTron Today?

Shareholders of SigmaTron International (NASDAQ:SGMA) are smiling today, and rightfully so. The electronic manufacturing services provider reported excellent earnings for the fiscal quarter ended Oct. 31, and shares of SGMA stock closed up over 80% on the day. SigmaTron has trounced on the S&P 500’s (NYSEARCA:SPY) return of 27% year-t0-date (YTD), as it has returned 223% YTD.

a computer chip
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SigmaTron reported revenue of $100.2 million, up 44% year-over-year (YOY). However, the company’s CEO Gary Fairhead commented that both revenue and the cost of products sold were inflated due to premiums paid for raw materials and supply chain issues. Shareholders of SGMA stock were quick to toss this comment aside, as evidenced by the share price increase today.

Fairhead expanded on the record quarter, adding that:

“The record results were driven by a strong and growing demand from existing customers as well as several new customers that have been added over the last year. The backlog remains strong, and new opportunities are significant. There has been no perceivable change in terms of trade policy between the United States and China and this continues to drive existing and potential customers to look at Mexico as a favored supply chain solution.”

So, what else is there to know about SigmaTron’s latest earnings report? Let’s jump right in.

SGMA Stock Earnings Highlights: What Investors Should Know

  • The company reported gross margins of 11.8%, up 2.04% YOY. Investors may have used this figure as a proxy to determine whether inflated cost of products sold harmed the top-line. Cost of products sold for the quarter was $88.4 million, up 27% YOY.
  • Earnings per share (EPS) came in at 69 cents, up 360% YOY from 15 cents.
  • Additionally, SigmaTron reported a record-high operating income of $5 million.
  • It stated that it expects its merger with Wagz to close before the end of the year. Wagz produces shock-free smart dog collars that are accessible by an app. Under the terms of the merger agreement, shareholders of Wagz will receive 2,443,870 shares of SGMA stock, which represents 28% of all SGMA shares.
  • Furthermore, SigmaTron announced a three-year labor agreement with the Elk Grove Village production union.
  • On a slightly negative note, CEO Gary Fairhead warned that the shortages that the electronic component marketplace is experiencing will not end any time soon. However, he also added that the “disruptions have required that we work closer than ever with our customers and the silver lining is that I believe we have built even stronger relationships. That bodes well going forward.”

On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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