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Stock Analyst Update

Solectron Deserves to Trade at a Premium

Company posts solid results despite continued component shortages.

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Solectron's (SLR) stock deserves to trade at a premium to its peers, and not at its current slight discount.

After reporting second-quarter earnings that were in line with consensus estimates in a late Monday release, Solectron put to rest fears that component shortages would eat into the company's profits for the second quarter in a row. (The company's fiscal first quarter was a challenge, as a shortage of key parts caused earnings to fall short of expectations.) Because most of Solectron's business consists of assembling technology hardware for its customers, having adequate supplies on hand is integral to the company's short-term success. Management, however, deserves kudos in the most recently reported quarter because Solectron met earnings estimates despite continued component shortages.

Jeremy Lopez does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.