원문 보기
on Thursday March 20th 2025 after the stock markets closed in the United States Micron Technology reported quarterly Financial results that pleased stock market investors ever so slightly the stock price was up over 2% in the aftermarket hours following the announcement of the company's earnings um I reviewed the company's earnings results and I was relatively pleased as well I have recommended Micron stock as a buy for over a year now and I was happy to see the company deliver solid results I'm going to review those figures here in this video and update my recommendation for micron stock and let you know if I still think it's a buy following these results or if I need to change that recommendation so let's jump into these interesting figures right so micron's CEO saying that they delivered fiscal second quarter earnings per share above their guidance and that's good and that data center Revenue tripled from a year ago so the segment where they're selling products into y generated record Revenue in that segment tripling from a year ago that is absolutely thriving and it's likely to continue doing so given how much spending is expected to go into these data centers optimized for AI the management team went on to say that they expect record quarterly Revenue in the upcoming quarter with dram and land demand growth so dram is memory and nand is storage for both electronic devices and data centers optimized for AI so they expect demand growth in both their data center segments and cons consumer oriented segments which had been the slower part of its business to rebound and they're on track for record revenue and significantly improved profitability in fiscal year 2025 you'd love to hear those types of comments as an investor in a company they're expecting record growth demand soaring significantly improved profitability all of these things are excellent uh statements you like to see from the management team of a company your following looking at the specifics they reported revenue of 8.53 billion in fiscal Q2 2025 and that was significantly higher than the 5.82 4 billion they reported in the same quarter last year operating income jumped to 1.77 3 billion up from 191 million in the same quarter last year and the operating margin jumped to 22% up from 3.3% last year so we saw this cyclical downturn for Micron Technology last year and starting this year for their fiscal year 2025 we're seeing a strong recovery in the company's business and they're forecasting continued Improvement ahead so for the second quarter of 2025 investments in capital expenditures were $ 3.09 billion and adjusted free cash flow came in at 857 million this is the one category that is spooking investors about Micron Technology stock over the last 6 months Micron Technology has spent more on purchases of property and Equipment than they've generated in cash flow from operations in the last 6 months so that Spooks investors when a company is spending so aggressively on capital expenditure and you don't need to look too far just down the street you look at Intel another company similar to Micron in that it has both manufacturing and design inhouse they've spent and that's primarily what's hurting the company is that those Capital expenditures have so far been ineffective and so that's what investors are concerned about here is that these Capital expenditures will turn out to be ineffective if they turn out to be as expected then it's going to be great news for micron stock investors but there's wide dispersion of the possibility of these Investments even though the expected value is positive otherwise management wouldn't undertake these Investments unless they expected positive value from them but there's a chance that it could be very negative and so that's what has investors on guard about Micron Technology stock still the company's balance sheet is strong they ended the quarter with uh cash and marketable Investments of $9.6 billion and they're not spending more than they're generating in cash flow from operations they're being prudent with their investment in capital expenditure something Intel didn't do inel went way beyond their cash flow from operations on their spending in capital expenditures they went Way Beyond and that's what forced them into this difficult position where they had to even pause their dividend for the upcoming quarter Micron is forecasting 8.8 billion in Revenue which would be a sequential increase from the previous quarter where they generated 8 billion in revenue and a gross margin of 35.5% which would be a slight sequential decline from the 36.8% in the current quarter so here's that stat I highlighted earlier this is for the six months that ended February 27 2025 Micron has generated 7186 billion in cash flow from operations and they've spent expenditures on property planted equipment 7.26 1 bill billion so slightly more than what they generated in cash flow from operations so this is the reason why Micron stock has not performed as well as you would expect given the numbers that the company is reporting in improvements in Revenue in profit and in cash flow what's holding the stock back is the risk surrounding these large Capital Investments but I think the positive expected value from these in investments in capital expenditures I think the probability of them coming to fruition are more favorable than not and so I've been more bullish than most on Micron Technology stock so updating the valuation if you recall my intrinsic value per share I calculated for micron stock is $139 I will update this oh in the next week or two as I digest this new information coming out of Micron from the current earnings release I'll go over the conference called transcripts and then I'll update my cash flow valuation model but as it is now $139 I still see it a3 a share and so I see a big upside here looking at it from my DCF perspective and then looking at it from a forward price to earnings perspective it's trading at a forward PE of 9.4 which I also think is undervalued significantly so to update my recommendation on my stock I still think it's a buy and I'll update that today March 20th 2025 wai
Comments 0