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Category: Stock Market and Micron Technology
Date: 28 September 2019 Stock Price: $43.21 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Micron Technology a supplier of memory and storage solutions for computers and mobile devices.
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About Micron Technology
For more than 40 years, we have been a world leader in innovative memory and storage solutions that accelerate the transformation of information into intelligence, inspiring the world to learn, communicate and advance faster than ever. We deliver the world’s broadest portfolio of technologies at the core of today’s most significant disruptive breakthroughs such as artificial intelligence and autonomous vehicles.
Overview of Micron Technology's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $4.87 billion (down from $8.44 billion from the same quarter of the previous year)
- Revenue decreased by -42.3% over the last 12 months
- Cost of goods sold: $3.47 billion (up from $3.28 billion for the same quarter of the previous year)
- Cost of goods sold increased by 5.79% over the last 12 months
- Net income: $561 million (down from $4.325 billion for the same quarter of the previous year)
- Diluted earnings per share: $0.49 (down from $3.56 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 1.128 billion (down from 1.216 billion for the same quarter of the previous year)
- Cash and cash equivalents: $7.95 billion
- Cash and cash equivalents per share: $7.04
- Cash and cash equivalents makes up 16.3% of Micron's market capital
- Cash and cash equivalents makes up 16.27% of Micron's total assets
- Accounts receivable: $3.195 billion
- Accounts receivable makes up 6.54% of Micron's total assets
- Stockholders equity of Micron: $36.770 billion
- Stockholders equity per share: $32.59
- Micron's is trading at 1.32 times its stockholders equity which is outside the expected range of between 2 and 4 which most companies tend to trade at.
- Cash generated from operations (for the 6 months) : $27.718 million
- Cash generated from operations per share (for the 6 months): $1.06
Micron Technology's management commentary on the results and earnings guidance
BOISE, Idaho, Sept. 26, 2019 (GLOBE NEWSWIRE) -- Micron Technology, Inc. (Nasdaq: MU) today announced results for its fourth quarter and full year of fiscal 2019, which ended August 29, 2019.
"Micron delivered fourth quarter results ahead of expectations, capping a fiscal 2019 in which we executed well in a challenging environment, significantly improved our competitive position, and returned cash to shareholders through share repurchases," said Micron Technology President and CEO Sanjay Mehrotra. "We are encouraged by signs of improving industry demand, but are mindful of continued near-term macroeconomic and trade uncertainties. As markets recover, Micron is well positioned to address the robust secular demand for memory and storage solutions."
The image below shows the fiscal guidance provided by Micron for their 1st quarter of 2020 fiscal year.
"Micron delivered fourth quarter results ahead of expectations, capping a fiscal 2019 in which we executed well in a challenging environment, significantly improved our competitive position, and returned cash to shareholders through share repurchases," said Micron Technology President and CEO Sanjay Mehrotra. "We are encouraged by signs of improving industry demand, but are mindful of continued near-term macroeconomic and trade uncertainties. As markets recover, Micron is well positioned to address the robust secular demand for memory and storage solutions."
The image below shows the fiscal guidance provided by Micron for their 1st quarter of 2020 fiscal year.
Micron Technology (NASDAQ: MU) stock price history
The image below, obtained from Google, shows the stock price history of Micron (NASDAQ: MU) over the last 5 years. And it's been a very good time for Micron (NASDAQ: MU). 5 years ago the stock was trading at around $33 and its currently trading at $43.21 That's a return of 30.9% over the last 5 years. The stock is trading closer to its 52 week high of $51.39 than it is to its 52 week low of $28.39 which to us is a clear indication that the short term sentiment and momentum is positive.
Recent coverage of Micron Technology
The extract below shows recent coverage of Micron Technology as obtained from Zacks
Micron Technology, Inc. (MU - Free Report) reported fourth-quarter fiscal 2019 non-GAAP earnings per share of 56 cents, which surpassed the Zacks Consensus Estimate of 48 cents but were lower than the year-ago quarter’s figure of $3.53. Meanwhile, Micron’s revenues of $4.87 billion in the quarter under review exceeded the Zacks Consensus Estimate of $4.52 billion but dropped around 42% on a year-over-year basis. Although the company suffered a drastic year-over-year fall in revenues and earnings, its better-than-expected fourth-quarter fiscal 2019 results coupled with an improved 2020 outlook for DRAM are making investors hopeful.
Recovery in demand for DRAM and NAND owing to increased inventory levels at most customers is a positive. However, the uncertainty hovering over trade and the economy is a major overhang on the company. Restriction on sales to Huawei negatively impacted the company’s revenues. Further, the company fears a worsening decline in sales to Huawei over the coming quarters in case it fails to secure the license to ship additional products to Huawei or if the trade ban is not removed. Notably, the company’s weak earnings and gross margin guidance for fiscal 2020 is a point of concern. The company projects earnings in the range of 39-53 cents per share for the fiscal first quarter. The mid-point of 46 cents is significantly below the current Zacks Consensus Estimate of 52 cents
Read the full article here
Micron Technology, Inc. (MU - Free Report) reported fourth-quarter fiscal 2019 non-GAAP earnings per share of 56 cents, which surpassed the Zacks Consensus Estimate of 48 cents but were lower than the year-ago quarter’s figure of $3.53. Meanwhile, Micron’s revenues of $4.87 billion in the quarter under review exceeded the Zacks Consensus Estimate of $4.52 billion but dropped around 42% on a year-over-year basis. Although the company suffered a drastic year-over-year fall in revenues and earnings, its better-than-expected fourth-quarter fiscal 2019 results coupled with an improved 2020 outlook for DRAM are making investors hopeful.
Recovery in demand for DRAM and NAND owing to increased inventory levels at most customers is a positive. However, the uncertainty hovering over trade and the economy is a major overhang on the company. Restriction on sales to Huawei negatively impacted the company’s revenues. Further, the company fears a worsening decline in sales to Huawei over the coming quarters in case it fails to secure the license to ship additional products to Huawei or if the trade ban is not removed. Notably, the company’s weak earnings and gross margin guidance for fiscal 2020 is a point of concern. The company projects earnings in the range of 39-53 cents per share for the fiscal first quarter. The mid-point of 46 cents is significantly below the current Zacks Consensus Estimate of 52 cents
Read the full article here
Micron Technology (NASDAQ: MU) latest stock valuation
So based on the earnings report of Micron (NASDAQ: MU) what do we value Micron (MU) stock at? Based on their latest earnings report and their fiscal guidance provided for their first quarter of 2020, our valuation models provide a target price (full value price) for Micron Technology stock at $33.50 a stock. We therefore believe the stock of Micron Technology is overvalued. We would therefore not advise long term fundamental or value investors buy into the stock of Micron at its current price levels. Rather look to enter the stock of Micron at least 10% below our target (full value) price of $33.50. So a good entry point into the stock would be around $30.20