I stumbled across this company and it seems to meet the “Saul criteria” (at least to my untrained eye). Just figured I’d post some info here and maybe open things up for discussion. My apology if SGH has already been evaluated on this board.
Name: SMART Global Holdings Inc.
Ticker: SGH
Market Cap: $897M
IPO Date: 5/24/2017
Current Price $40.26
About
From IR page:
“SMART Global Holdings, Inc. (“SMART” or “SGH”) is a global leader in specialty memory, storage and hybrid solutions serving the electronics industry for over 25 years. SMART delivers components, modules and solutions to a broad OEM customer base, in computing, networking, communications, storage, mobile and industrial markets. Customers rely on SMART as a strategic supplier offering extensive customer specific design capabilities and quality products with value added testing services, technical support, a global footprint and the ability to provide locally manufactured memory products in multiple geographies. SMART’s global, diversified customer base of over 250 customers includes some of the most well-recognized names in the technology industry. Its strategic presence in the U.S., Europe, Asia and Latin America enables SMART to provide customized, integrated supply chain services assisting OEM customers in the management and execution of their procurement processes and asset management on a worldwide basis. In Brazil, SMART has established itself as a market leader as the largest in-country manufacturer of mobile memory products for smartphones, and the largest in-country manufacturer of memory components and modules for desktops, notebooks and servers. Close collaboration with customers while providing custom designs, extended life cycle solutions and proprietary supply chain services, creates significant customer engagements and loyalty.”
Financials
P/E 15.90X
P/S .87X
P/FCF 16.55X
Gross Margin 22.4%
Net Margin 5.4%
2015 2016 2017 TTM 2017-02 2017-05 2017-08 2017-11 2018-02
Revenue $643 $534 $761 $1,009 $172 $207 $223 $265 $314
Cost of revenue $512 $427 $599 $783 $135 $160 $175 $208 $241
Gross profit $131 $107 $162 $226 $37 $47 $48 $58 $73
Operating income $(6) $7 $54 $117 $10 $20 $21 $31 $45
Net income $(46) $(20) $(8) $56 $(2) $8 $(10) $21 $37
Diluted EPS $(0.96) $(0.49) $2.51 $0.50 $(0.66) $0.92 $1.60
EBITDA $45 $39 $88 $146 $28 $28 $38 $51
Operating cash flow $1 $9 $6 $14 $35
Capital expenditure $(4) $(4) $(7) $(6) $(4)
Free cash flow $(3) $5 $(1) $8 $30
Revenue Mix - Segment and Geography
From the Annual Report:
“Our global, diversified customer base includes over 250 end customers, such as Cisco, Samsung, HPE, Dell
and LG. Our top ten end customers, five of which have been our end customers for over a decade, accounted for
84% of our net sales, including sales to contract manufacturers or ODMs at the direction of such end customers, in
fiscal 2017. Of our end customers, Samsung accounted for 19%, 13% and 11% of net sales in fiscal 2017, 2016 and
2015, respectively; Cisco accounted for 15%, 19% and 16% of net sales in fiscal 2017, 2016 and 2015, respectively;
Lenovo accounted for 11% and 13% of net sales in fiscal 2017 and 2016, respectively; Dell accounted for 15% of
net sales in fiscal 2015; and HP accounted for 14% of net sales in fiscal 2015 (in fiscal 2016, HP undertook a spinoff
and divided into two distinct companies, following which neither company accounted for 10% or more of our net
sales). Direct sales to Samsung accounted for 19%, 13% and 11% of net sales in fiscal 2017, 2016 and 2015,
respectively; direct sales to Flex accounted for 14% and 17% of net sales in fiscal 2017 and 2016, respectively;
direct sales to Hon Hai accounted for 13%, 11% and 11% of net sales in fiscal 2017, 2016 and 2015, respectively;
and direct sales to Dell accounted for 15% of net sales in fiscal 2015. During these periods, no other customers
accounted for more than 10% of our net sales. Of the $761.3 million of net sales in fiscal 2017, 52% were generated
in Brazil, 23% were generated in Asia, 21% were generated in North America and 4% were generated in Europe. Of
the $534.4 million of net sales in fiscal 2016, 46% were generated in Brazil, 26% were generated in Asia, 23% were
generated in North America and 5% were generated in Europe. For further geographic information regarding our net
sales and property and equipment, net, see Note 11 to our consolidated financial statements.”
Earnings call transcript from 3/22/2018
https://seekingalpha.com/article/4158404-smart-globals-sgh-c…
Investor Day Presentations
SMART Global Holdings Investor Presentation, March 2018
http://ir.smartm.com/phoenix.zhtml?c=254539&p=irol-prese…
SMART Global Holdings (SGH) Presents At Needham & Co. 20th Annual Growth Conference - Slideshow
https://seekingalpha.com/article/4138687-smart-global-holdin…
SMART Global Holdings (SGH) Presents At Deutsche Bank 2017 Technology Conference - Slideshow
https://seekingalpha.com/article/4107030-smart-global-holdin…
Analyst Comments and Targets
“Based on 6 analysts offering 12 month price targets for SGH in the last 3 months. The average price target is $59.83 with a high estimate of $75.00 and a low estimate of $48”
https://www.tipranks.com/stocks/sgh/price-target
“SMART Global Holdings (SGH) PT Raised to $70 at Roth Capital Following 2Q”
https://www.streetinsider.com/Analyst+Comments/SMART+Global+…
“As Data Storage Leaders Stumble, A New Industry Leader Emerges”
https://www.investors.com/research/ibd-industry-themes/data-…
4/26/2018 “Visa, Smart Global Holdings, Illumina Added To IBD 50 As Market Moves Higher”
https://www.investors.com/stock-lists/visa-smart-global-hold…
Mar-23-18 Reiterated Stifel Buy $47 ? $56
Mar-23-18 Reiterated Needham Buy $46 ? $75
Mar-23-18 Reiterated Barclays Equal Weight $40 ? $55
Dec-26-17 Reiterated Needham Strong Buy $43 ? $46
Dec-22-17 Reiterated Stifel Buy $40 ? $47
Nov-17-17 Reiterated Needham Strong Buy $40 ? $43
Nov-16-17 Reiterated Stifel Buy $35 ? $40
Oct-12-17 Reiterated Needham Strong Buy $33 ? $40
Oct-11-17 Reiterated Needham Strong Buy $33 ? $40
Annual Report
http://ir.smartm.com/phoenix.zhtml?c=254539&p=irol-annua…