Why Sanmina Stock Just Got Sacked

By Rich Smith – Dec 16, 2025 at 12:05PM ESTKey PointsSanmina will build a bigger factory in Texas, to begin production in 2027.Sanmina will also partner with a Croatian company to build a better transformer.These 10 Stocks Could Mint the Next Wave of Millionaires ›NASDAQ: SANMSanminaMarket Cap$8.6BToday's Changeangle-down(-6.92%) $10.94Current Price$147.23Price as of December 16, 2025 at 1:28 PM ETSanmina is growing, but that comes at a cost.Sanmina (SANM 6.92%) investors awoke to disappointment Tuesday, and the industrial stock is down 7.3% through noon ET despite what appears positive news. Deep in the heart of Texas, Sanmina Corporation plans "a major expansion of its Energy business with a new state-of-the-art factory in Houston." Opening in 2027, the new factory will target the U.S. energy market and be "capable of building a broad range of high-quality energy products, including: medium-voltage distribution transformers, instrument transformers and switchgear." Sanmina also noted that it has signed an agreement with Croatia's Koncar Electrical Industry, to co-design a custom medium-voltage transformer that Sanmina can sell in the U.S. Image source: Getty Images. 2027's not the problem. 2026 may be. Again, this sounds like good news. So why has it sparked a wave of selling among Sanmina investors? Part of the answer might be that investors don't like the idea of Sanmina sharing its profits with a partner. And after reviewing analyst forecasts for Sanmina, I noticed another potential concern. Although Sanmina is solidly profitable, with $4.46 per share earned last year and that number expected to rise both this year and next, free cash flow at Sanmina appears poised to take a significant hit in 2026.Advertisement Analysts polled by S&P Global Market Intelligence say Sanmina could burn up to $98 million this year, and perhaps as much as $288 million next year. ExpandNASDAQ: SANMSanminaToday's Change(-6.92%) $-10.94Current Price$147.23Key Data PointsMarket Cap$8.6BDay's Range$144.17 - $158.0552wk Range$63.66 - $178.39Volume17KAvg Vol775KGross Margin8.81% Is Sanmina stock a sell? If already incorporated in the estimates, building the new Texas factory could be part of the reason for this cash burn. Or if not already incorporated, the new factory could cause Sanmina to burn even more cash next year. Priced at 35 times earnings today, Sanmina already looks expensive. If it's burning cash, too, the stock could be even more expensive than it looks.About the AuthorRich Smith is a contributing Motley Fool defense and stock market analyst covering publicly traded and emerging companies in defense, space, aerospace, and other sectors. Prior to The Motley Fool, Rich practiced international corporate law for Clifford Chance in Russia, and for the Russian-Ukrainian Legal Group in Moscow, Kyiv, and Washington, D.C. He holds a bachelor’s degree in international relations from the College of William & Mary, a law degree from the University of Baltimore, and a language certification from the International Institute of Russian Language & Culture in Tver, Russian Federation. The Globe and Mail once featured him as “one of the best stock pickers since 2009.”TMFDittyX@RichSmithFoolRead NextJan 30, 2024 •By Rich SmithWhy Sanmina Stock Soared 28% Tuesday MorningOct 28, 2019 •By Motley Fool TranscribersSanmina Corp (SANM) Q4 2019 Earnings Call Transcript