Is Micron Technology a buy?
It’s time to breakdown another semiconductor name. Here is the breakdown on $MU, otherwise known as Micron Technology.
Current Price: $94.76
52/Wk High: $95.75
52/Wk Low: $31.13
Market Cap: $106.0 Billion
Read below for the breakdown!
Micron Technology ($MU) is a major semiconductor company whose core focus is memory solutions. While Micron has had its ups and downs, the company continues to be a leader in memory solutions across the world for over 40 years.
Breaking down Micron’s stock price according to TREFIS (@trefis) data, the Core DRAM segment represents 66.4% of the stock price.
Furthermore, the NAND flash segment represents 32% of the stock price while cash and or net of debt represents 1.6% of the stock price.
Given the massive rally in the semiconductor segment, Micron was led higher with the group, going on a strong 80.29% move to the upside.
Digging into the numbers, Micron beat Q1 2021 expectations with an EPS of $0.78, much better than the EPS consensus estimate of $0.71. On a year over year basis, EPS improved 62.50%.
As for revenues, Micron reported Q1 revenues of $5.77 billion, better than the Q1 2020 revenues level of $5.14 billion. On the downside, revenues did fall from $6.1 billion from the previous quarter.
Management went on to report net income on a GAAP basis of $803 million and a non-GAAP net income of $897 million, both of which significantly increased on a year over year basis.
Taking a look at gross margins, Micron reported a solid gross margin of $1.736 billion, representing a strong increase over the same time 2020 gross margin level of $1.366 billion.
On the downside, operating cash flow declined minimally to $1.97 billion from the same time 2020 operating cash flows level of $2.01 billion.
Shifting back to the positives, Micron reported a solid operating income of $866 million, much better than the same time 2020 operating income level of $518 million.
Management was upbeat about the quarter.
“Micron delivered outstanding fiscal first quarter results, driven by focused execution and strong end-market demand,” CEO Sanjay Mehrotra said.
Leadership also delivered bullish guidance, expecting Q2 2021 revenues to land around $5.8 billion and for gross margin to be roughly 25%.
Shifting into the balance sheet, the numbers are solid.
Total Debt: $6.629 Billion
Total Liabilities: $13.784 Billion
Total Assets: $53.691 Billion
Cash & Short Term Inv: $7.032 Billion
As for valuation, Micron trades at a lower premium compared to competitors.
Price to Earnings: 35.76x
Forward Price to Earnings: 11.98x
Price to Sales: 4.63x
Price to Book: 2.65x
Price to Cash Flow: 11.21x
Leadership has been quite effective as well.
Return on Equity: 7.85%
Return on Assets: 5.78%
Return on Invested Capital: 6.55%
Given the numbers the analysts are bullish with a mean price target of $102.63/share, representing an 8.31% gain.
It is also important to note that the high price target is $140.00/share, representing a 47.74% gain, while the low price target is $80.00/share, representing a -15.58% downside.
The big money is quite involved as well, with 83.45% of Micron being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and PRIMECAP Management Company.
On a technical basis, Micron is bullish. According to the six-month charts, the MACD recently shifted back to the upside with minimal momentum within a range of 3 to 3.45.
The six-month charts are also indicating an RSI of 64.89 and CCI of 162.84, both of which are on the high end.
In short, Micron Technology is a solid company within a growing industry. While the company has faced headwinds in recent years, management continues to succeed and move the company forward.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.