What is the risk-reward potential for SGH?
SMART Global Holdings, Inc. (NASDAQ:SGH) is a designer and manufacturer of electronics for computing, memory, and specialty LED solutions. SGH'S businesses specialize in application-specific product development and support for customers in enterprise, government, and OEM sales channels. SMART Global Holdings also offers products, customer service, technical support, and worldwide supply chain and logistics expertise. Ahead of the opening bell, SGH is trading flat, at $48.51.
On Wednesday, September 29, SMART Global Holdings is expected to release its fiscal fourth-quarter earnings. Historically, SGH has outperformed earnings expectations on all four of its most recent earnings reports.
For Q4 of fiscal 2020, SMART Global Holdings beat analysts’ estimates by a margin of $0.04, reporting an EPS of $0.82. For Q1 of fiscal 2021, SGH's EPS decreased to $0.78, still beating expectations by a margin of $0.08. For Q2 of fiscal 2021, SMART Global Holdings posted an increase in earnings, rising to $0.87 per share. The electronics company also beat estimates by a margin of $0.07. For Q3 of fiscal 2021, SGH reported an EPS of $1.39 and beat expectations by a margin of $0.30. Analysts have the company’s earnings coming in at an increased $1.60 per share for its upcoming earnings report.
SMART Global Holdings stock has increased about 87% year-over-year and SGH is up 105% since bottoming at a 52-week low of $23.60 last October. Additionally, shares of SGH have grown 29% year-to-date, but are currently off 16% from it's July 7, all-time high of $58.39.
Nonetheless, SGH may still offer potential as a recovery play. SMART Global Holdings stock has an intriguing forward price-earnings ratio of 8.75, which is significantly different from its current price-earnings ratio of 151.12.
It's worth noting SGH's climb in short interest in recent months. Up 6.3% during the most recent reporting period, this accounts for more than 10% of the stock's total available float, and would take short sellers four days to buy back their bearish bets.
The equity may be due for a round of bear notes, too. Specifically, all five covering analysts sport a "buy" or "strong buy" recommendation on SGH.