Sanmina Stopped Retiring Stock, And Then Its Shares Pulled Back

The company bought back nothing in its June quarter, and where that cash is going instead is the real case for the shares.

Sanmina (SANM) stock has fallen 26.5% over the past three months and now trades about 32% below its 52-week high, even though it is still up 65.5% over the past twelve months. Anyone circling that pullback will notice a company that has spent years retiring its own stock. The habit is real, and it is the wrong reason to buy the drop.

Buybacks, Not Operations, Widened The EPS Gap

Over the last three years Sanmina has shrunk its share count by about 2.4% a year on average. That is why earnings per share grew 4.4% a year on average over the same period while net income grew 2.6%. No operating improvement produced that gap; share retirement did. Do nothing for three years and your slice of those profits widens anyway.

Then Sanmina Bought Nothing At All In Its June Quarter

The three-year record of steady share retirement is intact; the past year is not. Sanmina repurchased no shares in fiscal Q3 2026, leaving about $600 million of board authorization unused. The last actual purchase, in fiscal Q2 2026, ran to about $160 million, which management described as offsetting the remaining dilution for fiscal 2026 rather than shrinking the base. The share count has fallen just 0.5% over the past year.

Racks, Boards And Transformers Have First Claim On The Cash

Sanmina is spending on metal fabrication capacity for AI system racks, on high-technology printed circuit boards for AI and defense work, and on a new medium-voltage transformer business, while the ZT Systems side adds power, liquid cooling and test-cell capacity for next-generation accelerated compute. Revenue reached $3.46 billion in fiscal Q3 2026, up 69.7% year over year, but free cash flow that quarter was $23.6 million against $342 million in fiscal Q2 2026, as working capital went into the build. Management has said it expects that pressure to continue.

Trailing Free Cash Flow Still Covers The Payout Two And A Half Times

The trailing twelve months carry both quarters, and over that window free cash flow still covers what Sanmina pays out to shareholders about 2.5 times over. Net debt runs near 0.5 times EBITDA and earnings cover the interest bill 5.8 times. A balance sheet with that much slack is the kind of thing the Trefis High Quality Portfolio looks for in its holdings. Sanmina’s authorization is untouched, so sitting out fiscal Q3 2026 was a preference, not a limit. The shareholder yield stands at 1.5% after stock compensation is netted off.

The Ramp, Not The Share Count, Is What You Are Buying

So the 32% gap to the 52-week high is not a discount on a shrinking share count, which barely moved over the past year. What is discounted is delivery. The next-generation accelerated compute program, which management expects to start contributing revenue in fiscal Q1 2027, has to ramp as described, and the 8% non-GAAP operating margin posted in fiscal Q3 2026 has to hold up better than management’s own longer-term expectation of a 6% to 7% non-GAAP range. Resumed buybacks are the reward for being right about that, not the reason to take the bet. For sizing an entry this far below the high, a screen built for beaten-down names is the place to start.

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