After going undisclosed for three years Sanmina Corporation (SANM), a manufacturer of electronics and systems for OEMs in a variety of industries, revealed details of a recently unsealed whistleblower lawsuit that prompted a Department of Justice (DOJ) fraud probe.

The case was unsealed after the DOJ declined to join the whistleblower as a plaintiff. However, the whistleblower can proceed and the DOJ says its four year old probe will continue, in part, as Sanmina is accused of:

“...submitting false cost and pricing data, fraudulently inducing the government to award contracts and violations of the Service Contract Act. The complaint alleges such claimed violations defrauded the government in an amount approximating $100 million.”

The revelation comes as Sanmina disclosed it has filed inaccurate financial statements in FY23 and FY24, marking the fifth consecutive of misstated its financials. Sanmina reported erroneous revenue figures between FY20-22, blaming a “stand-alone” finance division that lied to auditors and lacked “rigor.”

Notably though, Sanmina did not correct the errors in its latest annual report despite even though the misstatements:

“...resulted in adjustments and immaterial misstatements to inventory, accounts payable and accrued liabilities as of September 28, 2024 and September 30, 2023, respectively.”

Sanmina did not immediately respond when DuDil asked the company to quantify each of the misstated accounts and their impact on the balance sheet.

With an Enterprise Value (EV) of approximately $4.2 billion, Sanmina is priced as if it will grow annual sales to more than $12.9 billion, from the 2025 consensus estimate of $8.1 billion. To justify its current share price of $78.53 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Sanmina must:

—Grow sales 8% annually for the next seven years, in line with FY25 consensus estimates, slightly faster than the FY26 consensus estimate of 7.6% and significantly faster than the 3-year average of 5%
—Increase NOPAT margin to 3.4%, from our estimate of 3% in FY24

Sanmina’s current share price also implies the company will increase ROIC to 11.1%, up from our estimate of 8.5% in FY24 and our 3-year average estimate of 10.8%: