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Wednesday, September 27, 2023

SMART Global Holdings, Inc. (SGH) Stock in Decline, Here’s the Potential Cause

SMART Global Holdings, Inc. (SGH), a company that designs and manufactures speciality solutions for the computing, memory, and LED markets, has declined 5.98% in aftermarket trading session. Consequently, SGH stock is trading at $68.37 at the time of the writing. The decline could potentially be attributed to the announcement of quarterly results. On Tuesday, SGH stock nominally declined by 0.38% during the regular trading session and closed the day at $72.72.

SGH Q1 2022 Operational Results

On Tuesday, SGH released the operational results for the first quarter of the fiscal year 2022. The quarter ended on 26th November 2021. The company generated total net sales of $469.9 million during the quarter against $291.6 million for the same period of 2020. The total operating expenses for the three months stood at $87.4 million against $86.05 million for the same period of 2020. The net income generated by the company during the quarter was $20.69 million (or $0.82 and $0.73 per basic and diluted share) against $21.2 million (or $0.85 and $0.78 per basic and diluted share) during the same quarter of 2020.

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Q2 2022 Business Outlook

Alongside the operational results, SGH also released the business outlook for the upcoming quarter. The company believed that during Q2 2022, it would generate net sales of $415 to $455 million in the case of GAAP and non-GAAP outlook. The GAAP gross margin is estimated to stand between 23 to 25%, while the non-GAAP gross margin would stand between 24 to 26%. The company expects the GAAP diluted earnings per share to be approximately $0.70, while non-GAAP diluted EPS is estimated to be about $1.45.

Executive Commentary

Mark Adams, CEO of SGH, while commenting on the results said that the company has continued its strong momentum during the fort quarter of fiscal 2022. The company has achieved record revenue and non-GAAP gross margins during the quarter. The step of stock split was a significant milestone for the company during the quarter, and the company intends to further enhance its liquidity and its shareholders base.

Future Outlook for SGH

During the last three months, SGH stock has increased by more than 60%. Estimates suggest that the stock is in a good position to thrive upon this gain in the upcoming months. Hence, potential investors should keep a close eye on the performance of SGH stock.

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