In its most up-to-date quarter, Micron Expertise (MU) broke a five-quarter streak of income declines, signaling a much-awaited optimistic progress. Nevertheless, it additionally noticed a waning in money reserves. With this combined efficiency, is it sensible to spend money on MU earlier than its second-quarter earnings launch? Let’s discover out….
Micron Expertise, Inc. (MU) is ready to unveil its fiscal 2024 second-quarter earnings on March 20. The corporate is anticipated to document a income of $5.34 billion, reflecting a 44.6% year-over-year improve. Nevertheless, it is usually anticipated to report a loss per share of $0.25 throughout the identical interval.
In latest occasions, MU, like many semiconductor friends, has stood out within the inventory market owing to the mounting demand for its reminiscence and storage chips. In the course of the quarter that ended on November 30, 2024, its income rose by 15.7% to $4.73 billion, breaking a streak of 5 consecutive income declines.
Nevertheless, in the identical quarter, MU’s non-GAAP working loss considerably widened year-over-year to $955 million. Its non-GAAP internet loss and non-GAAP loss per share stood at $1.05 billion and $0.95, respectively, a big rise from internet loss and loss per share of $39 million and $0.04 within the earlier 12 months’s interval.
Moreover, as of November 30, 2023, the corporate’s money and money equivalents amounted to $8.08 billion, down from $8.58 billion as of August 31, 2023. Additionally, its complete belongings got here in at $63.78 billion, in comparison with $64.25 billion as of August 31, 2023. Shares of MU have plunged 1% over the previous 5 days to shut the final buying and selling session at $93.78.
Listed below are the basic points of MU that would affect its value efficiency within the close to time period:
Combined Historic Progress
Over the previous three years, MU’s tangible guide worth and complete belongings elevated at a CAGR of two.5% and 5.9%, respectively. Nevertheless, its income and EBITDA declined at respective CAGRs of 9.8% and 48.4% over the identical timeframe.
Combined Analyst Estimates
The consensus income estimate of $22.80 billion for the fiscal 12 months ending August 2024 displays a 46.7% year-over-year improve. Nevertheless, the corporate is predicted to report a loss per share of $0.24 for a similar 12 months.
Poor Profitability
The inventory’s trailing-12-month gross revenue margin of damaging 14.49% compares with the trade common of 49.18%. Its trailing-12-month EBITDA margin and trailing-12-month asset turnover ratio of seven.87% and 0.25x are 12.4% and 59.5% decrease than the trade averages of 8.98% and 0.61x, respectively.
As well as, the corporate’s trailing-12-month levered FCF margin of damaging 24.06% compares with the 9.01% trade common.
Stretched Valuation
When it comes to trailing-12-month EV/Gross sales, MU is buying and selling at 6.63x, 118.6% greater than the trade common of three.03x. Its trailing-12-month EV/EBITDA and trailing-12-month Worth/Gross sales of 84.32x and 6.31x are 368.1% and 121.3% greater than the respective trade averages of 18.02x and a pair of.85x.
Moreover, the inventory’s trailing-12-month Worth/Money Circulate of 51.04x compares with the trade common of 20.28x.
POWR Rankings Exhibit Weak Prospects
MU’s bleak outlook is mirrored in its POWR Rankings. The inventory has an general score of D, which interprets to Promote in our proprietary score system. The POWR Rankings are calculated by bearing in mind 118 various factors, with every issue weighted to an optimum diploma.
Our proprietary score system additionally evaluates every inventory based mostly on eight distinct classes. MU reveals a D grade for Worth, which aligns with its lofty valuation that surpass trade requirements. Equally, it holds a D grade for Stability, justified by its 60-month beta of 1.24, notably exceeding the benchmark of 1.
MU is ranked #77 out of 89 throughout the Semiconductor & Wi-fi Chip trade. Click on right here to entry MU’s Progress, Momentum, Sentiment, and High quality scores.
Backside Line
Regardless of income progress, MU incurred substantial losses in its most up-to-date reported quarter, alongside declining money reserves and a discount in complete belongings, suggesting looming monetary hurdles. Moreover, with an elevated valuation and unstable circumstances, it appears sensible to keep away from MU in the mean time.
How Does Micron Expertise, Inc. (MU) Stack Up Towards Its Friends?
Whereas MU has an general grade of D, equating to a Promote score, chances are you’ll try these A (Sturdy Purchase) rated and B (Purchase) rated shares throughout the Semiconductor & Wi-fi Chip trade: Cirrus Logic, Inc. (CRUS), ChipMOS TECHNOLOGIES INC. (IMOS) and Everspin Applied sciences, Inc. (MRAM). To discover extra Semiconductor & Wi-fi Chip shares, click on right here.
What To Do Subsequent?
43 12 months funding veteran, Steve Reitmeister, has simply launched his 2024 market outlook together with buying and selling plan and prime 11 picks for the 12 months forward.
2024 Inventory Market Outlook >
MU shares fell $1.88 (-2.00%) in premarket buying and selling Tuesday. 12 months-to-date, MU has gained 9.89%, versus a 7.90% rise within the benchmark S&P 500 index throughout the identical interval.
In regards to the Writer: Aanchal Sugandh
Aanchal’s ardour for monetary markets drives her work as an funding analyst and journalist. She earned her bachelor’s diploma in finance and is pursuing the CFA program.She is proficient at assessing the long-term prospects of shares along with her elementary evaluation abilities. Her objective is to assist buyers construct portfolios with sustainable returns.
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