Lincoln International’s electronics group released its Q309 Electronics Manufacturing Services (EMS) Stock Index.
Similar to the S&P 500 Index, the EMS Stock Index is a market cap weighted composite index.
The index is prepared by first selecting a base period, in this case, Q1 2003, and totaling the market caps of the companies for each tier in this period. This period and total market cap is set to a base index, in this case, 1000.
Next, for each tier, the current period’s total market cap is calculated, divided by the base period’s total market cap and then multiplied by the base index (1000).
The report draws attention to:
- Quarterly performance of the EMS Stock Index versus the S&P Index
- Relative market valuations of each EMS Tier
- Current financial data for each company in the index
Information for EMS companies and relative EMS stock value performance in the firm’s EMS universe study is based on sales dollar figures, by tier, as follows:
- Large (Tier I)…Greater than $3 billion
- Mid (Tier II)…$300 million to $3 billion
- Small (Tier III)…$150 million to $300 million
- Micro (Tier IV)…Below $150 million
Looking at the EMS Stock Index by Size graph, above, highlights include:
- Large Index has increased 72.7% from last quarter
- Mid Index has increased 29.0% from last quarter
- Small Index has increased 11.5% from last quarter
- Micro Index has increased 41.6% from last quarter
Looking at EMS companies by tier, based on quarter-over-quarter share price performance, winners and losers can be identified:
| Winner’s Circle | Tier | ||
| Sanmina-SCI | 227% | I | |
| Sypris Solutions | 111% | II | |
| SigmaTron | 88% | III | |
| Simclar, Inc. | 66% | IV | |
| Worst Performers | Tier | ||
| Elcoteq SE | 32% | I | |
| Benchmark Electronics | 25% | II | |
| SMTC Corp. | (11%) | III | |
| Nortech Systems | 15% | IV | |
From a valuations perspective (compared to Q209) multiples were evaluated across all four tiers with findings as follows:
- Multiples for Large tier EMS companies increased due to an increase in equity values and lower EBITDA results.
- Mid tier EMS company multiples increased due to lower EBITDA and higher equity values.
- Small tier EMS company multiples increased due to higher equity values and lower EBITDA.
- Multiples for Micro tier EMS companies increased due to higher equity values.
* Enterprise Value is calculated as Market Cap on June 30, 2009 plus debt, preferred equity and minority interest less cash
Electronics manufacturing services (EMS) stock index data follows:
Source: Lincoln International Electronics Group, VentureOutsource.com, October 2009
Comments