Ingram Micro (INGM): Buy, Sell, or Hold Post Q1 Earnings?
Is there a buying opportunity in Ingram Micro, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it's free.
Even with the cheaper entry price, we're swiping left on Ingram Micro for now. Here are three reasons why INGM doesn't excite us and a stock we'd rather own.
Examining a company's long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Ingram Micro's sales grew at a sluggish 1.3% compounded annual growth rate over the last five years. This was below our standards.
Analyzing the 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 dropped 20.5%, or 9.8% annually, over the last two years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Ingram Micro's low margin of safety could leave its stock price susceptible to large downswings.
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.
Ingram Micro falls short of our quality standards. Following the recent decline, the stock trades at 6.3× forward P/E (or $19.13 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere. We'd recommend looking at one of Charlie Munger's all-time favorite businesses.
Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
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