Micron stock analysis. MU Stock.
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Micron Technology supplies memory and storage hardware to some of the world’s largest companies. Its DRAM products help to power iPhones, smart vehicles, datacenters and more. While NAND flash and SSD drives are used for storage.

Based on the latest share price, Micron has a market cap of 81 billion dollars. With 12 billion of cash and investments and 12 billion of long-term debt, the enterprise value is roughly the same.

Meanwhile, the company has produced 23 billion in revenue over the last 12 months, 9.6 billion of EBITDA but only 1.6 billion of net income. So Micron is valued at 3.5 times revenue, 8.4 times EBITDA and 51 times earnings.

Micron is a tricky company to value. On the one hand the company should be well positioned as a beneficiary of huge trends like artificial intelligence, 5g and electric vehicles.

On the other hand, Micron is a cyclical stock that has seen wild swings in revenue. Revenue collapsed 23% in 2016, 23% in 2019 and this year looks like it will see a similar decline.

Even worse, margins collapsed in the last quarter, with the company posting a negative gross margin of -33% and a record loss of 2.31 billion.

The Micron CEO said that “The semiconductor memory and storage industry is facing its worst downturn in the last 13 years with an exceptionally weak pricing environment”

And Micron’s figures were published before news that China is to ban sales of Micron’s memory chips. Micron derives more than 10% of its revenue from China so this news should be significant.

And yet Micron stock is up almost 8% since the news broke. So what’s going on?

The main reason is the blowout earnings from Nvidia which is providing a tailwind to semiconductor and memory stocks across the board. Datacenters and large language models require large amounts of memory so Micron is seen as another AI play and Micron’s products are in high demand.

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