Ingram Micro trades at $26.99 per share and has stayed right on track with the overall market, gaining 20.8% over the last six months. At the same time, the S&P 500 has returned 21.4%.
Is now the time to buy Ingram Micro, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Ingram Micro Not Exciting?
We’re cautious about Ingram Micro. Here are three reasons you should be careful with INGM, plus one stock we’d rather own.
1. Long-Term Revenue Growth Flatter Than a Pancake
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Ingram Micro struggled to consistently increase demand as its $55.98 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and is a sign of lacking business quality.
2. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Ingram Micro’s full-year EPS grew at a weak 3.4% compounded annual growth rate over the last four years, worse than the broader business services sector.
3. Breakeven Free Cash Flow Limits Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Ingram Micro broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.
Final Judgment
Ingram Micro’s business quality ultimately falls short of our standards. That said, the stock currently trades at 7.5× forward P/E (or $26.99 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We’re fairly confident there are better stocks to buy right now. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.
Stocks We Like More Than Ingram Micro
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