SigmaTron International Faces Challenges with Q1 Earnings and Outlook

Shares of SigmaTron International have experienced a significant decline of over 40% in premarket trading following the company’s report of a sharp drop in quarterly earnings and a downbeat short-term outlook.

Earnings Drop and Sales Decline

During its fiscal first quarter that ended on July 31, the electronic-manufacturing-services company based in Elk Grove Village, Illinois, saw a substantial decrease in earnings. From $3.12 million, or 50 cents a share, the earnings from continuing operations dropped to $262,099, or 4 cents a share, compared to the previous year.

Sales showed a decline of 7%, amounting to $98.1 million.

Effects of the Federal Reserve’s Measures

SigmaTron has attributed this decline in demand to the Federal Reserve’s efforts to slow inflation, which in turn has weakened the U.S. economy. As a result, some of the company’s customers have experienced reduced demand. However, SigmaTron notes that while demand remains strong for certain customers, others have faced short-term softness.

Continued Uncertainty

SigmaTron expects this uncertainty to persist throughout the remainder of the calendar year. The company has communicated that its customers view this softness as a temporary condition and anticipate an uptick in their requirements by year-end.

Share Performance

Shares of SigmaTron, which closed at $7.60 on Friday, have taken a significant hit in premarket trading. Currently, they are down almost 42% at $4.44.

In conclusion, SigmaTron International faces challenges with declining earnings and sales, largely influenced by the efforts of the Federal Reserve to slow inflation. While certain customers continue to show strong demand, others require time to recover.