SigmaTron International (NASDAQ:SGMA): Why CEO Declared Results Unfit

Pamela Garcia - March 17, 2014

Boston, MA 03/17/2014 (wallstreetpr) –SigmaTron International (NASDAQ:SGMA) shares are clearly getting powered since the company released its third quarter results. Yet, the company’s chief executive officer Gary Fairhead said that the results were a disappointment overall. So then, why did the CEO state that and what does that mean to you the investor?

Clearly, it means that the results which the company reported, though positive, were below the expectations of the insiders for whom the CEO spoke on behalf. Now that it is known the results were not the best for the quarter, it is important to shift through the data and the narrative around the third quarter performance to come up with a clear picture on which investment decisions can be based.

So then, we take a look into the figures as they came and then turn our eyes to the CEO sentiment and deduce what that is supposed to mean.

Third quarter results

SigmaTron International (NASDAQ:SGMA) reported net income of $744,000 or 18 cents per share for the third quarter. That contrasted with net income of $217,000 or 6 cents that was realized in the corresponding quarter a year ago.   Revenue in the quarter came in at $54.2 million, up from $46.8 million a year ago.

CEO sentiment over the results

Commenting on the performance, Mr. Fairhead observed that while the company managed positive earnings per share on the diluted shares, the results were generally a disappointment. The reason was that the positive earnings were achievable on the basis of deferred tax items due to new legislation in Mexico. In that case, the company actually posted pre-tax loss of $130,180 in the quarter.

As if that was not enough, the CEO went on to say that revenue was actually weaker than the earlier quarter by 4.2 percent. The executive observed that the decline in revenue sequentially was due to the impact of the Lunar New Year in Asia and generally softer sales in the quarter.

Positive note

Although the CEO acknowledged not-so good third quarter, the positive note is that the company is set on solid grounds to turn better results. He identified efforts such as building strong partnerships and networks with customers and their expansion plans that are very much on track.

The medical ISO certification that the Illinois plant received during the third quarter, the CEO hopes, will open up new and more opportunities for the company.

Thus, SigmaTron International (NASDAQ:SGMA) is generally set on the right track to solid earnings and strong stock price growth.


Pamela Garcia

Pamela Garcia is a keen follower of U.S. stock market

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