What a time it’s been for Micron. In the past six months alone, the company’s stock price has increased by a massive 334%, setting a new 52-week high of $1,040 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy MU? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive on Micron?
Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NASDAQ:MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Micron’s sales grew at an exceptional 19.9% compounded annual growth rate over the last five years. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
2. Operating Margin Reveals a Well-Run Organization
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Micron has been a well-oiled machine over the last two years. It demonstrated elite profitability for a semiconductor business, boasting an average operating margin of 38.3%.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Micron’s EPS grew at 43% compounded annual growth rate over the last five years, higher than its 19.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why Micron ranks near the top of our list, and with the recent surge, the stock trades at 10.3× forward P/E (or $1,040 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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