MU

Taking Micron Technology (MU) through Graham-Doddsville

Micron Technology (MU) shares moved -3.4 % today, bringing their 52 week performance to -30.4%. Micron Technology, Inc. designs, develops, manufactures, and sells memory and storage products worldwide. The large-cap Technology company has 48,000 full time employees and is based in Boise, United States. Micron Technology has returned a 0.75 % dividend yield over the last 12 months.

Earnings Valuation

Compared to the Technology sector's average of 26.5, Micron Technology has a trailing twelve month price to earnings (P/E) ratio of 7.2 and an expected P/E ratio of 16.1. P/E ratios are calculated by dividing the company's share price by its trailing 12 month or forward earnings per share, which stand at $7.75 and $3.46 respectively. Retained earnings have averaged $37,617,500,000.00 over the last 4 years.

Assets and Debt Valuation

Micron Technology's price to book (P/B) ratio is 1.2 compared to the sector average of 5.57.

In Micron Technology’s case, current assets outweigh current liabilities by a factor of 2.9. Current assets refer to company assets that can be transferred into cash within one year, such as accounts receivable, inventory, and liquid financial instruments. Current liabilities, on the other hand, refer to those that will come due within one year.

The Quick Ratio, or Acid Test, is the company's current assets minus its inventory and prepaid expenses divided by its current liabilities. Micron Technology's quick ratio is 1.918. Generally speaking, a quick ratio above 1 signifies that the company is able to meet its liabilities. Since Micron Technology’s debt ratio is 0.4, the company has healthy debt levels.

Intrinsic Value

The Graham number is the square root of (22.5 x earnings per share x book value per share), which for Micron Technology gives us a fair price of $89.19, compared to the stock’s market price of $55.7. Micron Technology’s current market price is -37.5% below its Graham number, which implies that there is upside potential — even for conservative investors who require a significant margin of safety.

Cash Flows

Date Reported Cash Flow from Operations ($) Capital expenditures ($) Free Cash Flow ($) YoY Growth (%)
2022-09-01 15,181,000,000.0 -12,067,000,000.0 3,114,000,000.0 27.73
2021-09-02 12,468,000,000.0 -10,030,000,000.0 2,438,000,000.0 2837.35
2020-09-03 8,306,000,000.0 -8,223,000,000.0 83,000,000.0 -97.57
2019-08-29 13,189,000,000.0 -9,780,000,000.0 3,409,000,000.0 n/a

Micron Technology has an irregular stream of positive cash flows. With a coefficient of variability of 66.7% and an average growth rate of 922.5%. The table below shows us that capital expenditures are evolving at a 8.8% rate with a variability of 15.7%, versus 11.6% and 23.5% for cash flows from operations..

Margins

Date Reported Revenue ($) Cost of Revenue ($) Gross Margins (%) YoY Growth (%)
2022-09-01 30,758,000,000.0 16,860,000,000.0 45.18 19.52
2021-09-02 27,705,000,000.0 17,233,000,000.0 37.8 23.65
2020-09-03 21,435,000,000.0 14,883,000,000.0 30.57 -33.14
2019-08-29 23,406,000,000.0 12,704,000,000.0 45.72 n/a

Micron Technology's cost of revenue is growing at an average rate of 15.2% with variability of 14.0% compared to 10.6% and 16.2% for its revenues. As a result, the company's average operating margin is 39.8% with an average growth rate of 3.3% and a variability of 17.9%.

Date Reported Total Revenue ($) Operating Expenses ($) Operating Margins (%) YoY Growth (%)
2022-09-01 30,758,000,000.0 21,049,000,000.0 31.57 28.7
2021-09-02 27,705,000,000.0 20,909,000,000.0 24.53 71.78
2020-09-03 21,435,000,000.0 18,375,000,000.0 14.28 -54.77
2019-08-29 23,406,000,000.0 16,016,000,000.0 31.57 n/a

Micron Technology's operating expenses are evolving at an average rate of 9.7% with variability of 12.5% compared to 10.6% and 16.% for its revenues. As a result, the company's average operating margin is 25.5% with an average growth rate of 15.2% and a variability of 32.1%.

Sentiment

Micron Technology benefits from positive market sentiment. The stock has an average rating of buy and target prices ranging from $100 to $45. MU is trading -16.79% away from its target price of $66.94. 3.0% of the company's shares are tied to short positions, and 82.5% of the shares are held by institutional investors.

Holder Shares Date Reported Percentage Value
Vanguard Group, Inc. (The) 91,605,706 2022-09-29 8.43% $5,102,437,894.00
Blackrock Inc. 83,297,539 2022-09-29 7.66% $4,639,672,985.00
Capital Research Global Investors 47,470,260 2022-09-29 4.37% $2,644,093,518.00
State Street Corporation 45,472,484 2022-09-29 4.18% $2,532,817,393.00
Sanders Capital, LLC 42,131,053 2022-09-29 3.88% $2,346,699,684.00
Primecap Management Company 40,434,127 2022-09-29 3.72% $2,252,180,904.00
Capital International Investors 22,180,998 2022-09-29 2.04% $1,235,481,605.00
Geode Capital Management, LLC 20,245,373 2022-09-29 1.86% $1,127,667,291.00
Wellington Management Group, LLP 14,056,218 2022-09-29 1.29% $782,931,353.00
Capital World Investors 13,808,967 2022-09-29 1.27% $769,159,472.00
Holder Shares Date Reported Percentage Value
Vanguard Total Stock Market Index Fund 32,883,752 2022-06-29 3.02% $1,831,625,011.00
Vanguard 500 Index Fund 25,007,395 2022-09-29 2.30% $1,392,911,920.00
Vanguard/Primecap Fund 24,436,874 2022-09-29 2.25% $1,361,133,900.00
Growth Fund Of America Inc 19,665,670 2022-09-29 1.81% $1,095,377,834.00
Invesco ETF Tr-Invesco QQQ Tr, Series 1 ETF 16,198,242 2022-09-29 1.49% $902,242,091.00
Amcap Fund 13,228,827 2022-09-29 1.22% $736,845,673.00
SPDR S&P 500 ETF Trust 12,608,730 2022-10-30 1.16% $702,306,270.00
Fidelity 500 Index Fund 11,917,125 2022-09-29 1.10% $663,783,871.00
iShares Core S&P 500 ETF 9,798,217 2022-09-29 0.90% $545,760,694.00
Fundamental Investors Inc 8,885,762 2022-09-29 0.82% $494,936,950.00

Overall, the Market Inference analysis team rates this stock as being fairly valued with mixed growth indicators and positive market sentiment.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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