Momentum faded quickly as performance fell back to just over a billion in sales in 2019 with earnings power cut to $2 per share (ahead of the split) and ever since shares recovered again. It must be said that the company has undergone a two-for-one stock split earlier this year, so really earnings power came in around $2.50 per share if you look up a recent chart from those days. The company generated $1.3 billion in sales in its fiscal 2018 (ending in August that year) of which $800 million in Brazil, while posting earnings power close to $5 per share. In essence, these are lower valued-added tasks in a competitive and cyclical industries, at least that was the core business at the time of the IPO in 2017. In its very essence, the core expertise of SMART is that it buys flash and memory modules from producers like Micron Technology ( MU) and Intel ( INTC), only to configure them and sell them to end clients like HP ( HPQ), Cisco Systems ( CSCO) and Dell, among many others. This diversification and a cyclical recovery have been beneficial, yet with most of the operating momentum being a thing of the past already, I was holding a neutral stance at the time. In January of this year I concluded that shares of SMART Global Holdings ( NASDAQ: SGH) looked fair, as the business has focused on greater diversification, notably with the purchase of the LED business from Cree.
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