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마이크론은 실적 상회에도 주가가 하락했고, 과거 5년 ROC는 높지만 최근 12개월 매출·순이익·잉여현금흐름이 급감해 6개 지표 중 2개만 통과. DCF 적정주가 약 57달러로 현재가 대비 약 11% 고평가. 공급 과잉과 중국 규제 리스크 vs. AI·5G 수요 및 과점 구조 장점을 제시. 투자 권유 아님을 명시.
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microns down even though they beat on their earnings super investors have been split on Micron Technologies stock ticker mu but not for the reasons that you might think with both some pretty big sells and some big Buys in the last quarter what's the real investment story behind Micron microns impacted by semiconductor export bands but that's only one of the factors affecting their business What secrets do their financials hold to clueless in and give us a better idea we're using the select 6 analysis to look at the most telling Financial metrics before estimating a fair value for Mu stock you'll want to stay till the end when we give our final rating along the way there's going to be a key bonus metric that just might be the Tipping Point when analyzing Micron for your stock portfolio this analysis is going to be intense but worth it before we get into these valuable metrics how has Micron performed right now Micron trades for 68 dollars and 21 cents per share they're up 40 percent year-to-date which beats the market the S P 500 is 17 percent in the last decade Micron has beat the market as well they're compounding at 15 annually with some Cycles here and there they've easily beat the market over this time going back before the global financial crisis in the last 18 and a half years microns compounded at 10 annually again beating the market over this time keep in mind semiconductors are a cyclical business many of the top performers in the last decade have been semiconductor stocks as it was a real boom time for the industry right now Micron pays a 0.68 dividend yield the average of their modest yield is added to their returns in their stock throughout this time Micron trades six dollars below their 52-week High the company trades 20 above their 52-week low there are some short interest with just over two percent of their shares sold short microns a big business they have a 74 billion dollar market cap but the burning question is why are super investors paying such close attention to Micron Micron is one of the largest semiconductor companies in the world specializing in memory and storage chips its primary revenue stream comes from Dynamic random access memory or dram it also has minority exposure to not and or nand Flash chips Micron serves a global customer base selling chips in a data Center's mobile phones consumer electronics and Industrial and Automotive applications the firm is vertically integrated as a tech company it may be surprising Micron is headquartered in Boise Idaho now let's dive deep into their numbers starting with metric number one we want their average return on Capital in the last five years to be above 14 the average business earned seven percent Returns on Capital looking for a benchmark that's double this can build in margin of safety based on the quality of the business semiconductors are a cyclical business microns no exception we get to see that here in their return on Capital numbers these Came Crashing Down from 2018 to 2020 since then they've been picking it back up in their last five fiscal years when we average these out microns earned 18 and a half percent average Returns on Capital in a given year that's several percentage points above the Benchmark we're looking for this is a check on Metric number one for micron bear in mind the Cycles the semiconductor industry goes through Micron actually has negative average Returns on Capital in their last 12 months we'll continue to touch on that throughout the rest of our analysis metric number two we're looking for growth in their revenues net incomes and free cash flows this metrics All or Nothing all three need to be up for this to be a check will also include their last 12 months worth of numbers which aren't shown on this chart that's very important micron's revenues in this time alone are down 40 percent even though they were pretty much flat from 2018 to 2022 in their last 12 months Micron generated 18 billion dollars in Revenue that's down from where they were at in 2020 with this huge hit to their revenue they've also seen a huge hit to their profitability micron's earnings have gone from being positive to negative that's the same with their free cash flows which were positive in their last five fiscal years even including the hit the company took in 2020.
with the company's most recent guidance it still looks like it'll take some time for things to get better for the business all three of these are down this is an x on Metric number two metric number three we're looking at Micron from the view of an individual shareholder we want to see earnings per share growth micron's earnings have gone from being positive to they are negative today because of this they have negative earnings per share which aren't reflected on this chart at the same time however microns bought back 11 of their shares outstanding those sheer BuyBacks may be one of the few benefits of being in a cyclical industry but that requires very good Capital allocation for management even with these share BuyBacks because their earnings are now negative this is an x on Metric number three so far we're one for three through our first three metrics does Micron have what it takes to pick it up in the back half of our analysis metric number four we want to see free cash flow per share growth a similar situation here their free cash flows are negative today even with their share BuyBacks their free cash flows per share have declined this is still an x on Metric number four it's always scary when a company's free cash flows decline like this as it can expose them if they have too much debt before we cover micron's debt and ultimately get to our valuations it's time for our bonus we want my crunch dividends to be supported by their free cash flows as our bonus Micron just started paying out dividends in 2021 they increased this year over year and they're also paying dividends today right now they have a modest 0.68 dividend yield however their free cash flows are negative they no longer support their dividends this is not what we want to see this is an X as microns off on our bonus in recessions it's businesses with too much debt that can have the biggest losses and potentially even go bankrupt metric number five we want micron's net debt which is their total debt minus their cash in their short-term Investments to be below the sum of their free cash flows in their last five fiscal years in this time Micron has had negative net debt in all five years this means they have cash left over after paying off their debt hats their last 12 months is an exception to this Micron actually has 2.6 billion dollars in net debt a first for the business throughout any of this time frame in their last five fiscal years Micron did ultimately produce 17.6 billion dollars worth of free cash flow most of that however came in 2018 while this is a check on Metric number five you'll want to keep in mind they have negative free cash flows in their last 12 months Micron consumed 4.7 billion dollars of free cash flow in that time that was even as the company cut their Capital expenditures year over year that's potentially a pretty rough sign for the business with their current debt position that's not something they can sustainably do going forward the big metric of them all metric number six we want microns average five-year free cash flow divided by their Enterprise Value to give us a yield that's above five percent if this is the case this gives a slight risk premium to the yield of the 10-year treasury right now Micron has a 77 billion dollar Enterprise Value this accounts for both their market cap and their net debt position it gives a view of Micron similar to looking at it as a private business we learned in their last five years microns produced 17.6 billion dollars of free cash flow this means they produce three and a half billion dollars in an average year when that's divided by their Enterprise Value we get a four and a half percent average free cash flow to Enterprise Value yield that comes in just below the risk premium we're looking for on a current basis Micron has a negative current free cash flow to Enterprise Value yield as their free cash flows are negative both of these are down from what we want this means on Metric number six this is an X but we're not finished yet don't just throw a micron out we still need to estimate their fair value per share and give our rating everything we've discussed so far is important but there's something missing that in my opinions the main reason to analyze Micron this takes us on to using a discounted cash flow model to estimate their fair value per share a DCF model is based on the predictability of a company's free cash flows micron's been somewhat predictable even though they're a semiconductor business and that's a cyclical industry keep that in mind as we make these assumptions we're taking the average of their last three fiscal years of free cash flow then using historical assumptions to project these into the future it's up to you to figure out if these will be accurate or not for micron assuming they grow their average three year free cash flows at just under eight percent annually then assuming in the following decade this is cut in half and these grow at three and a half percent annually We'll add in their tangible Book value to give an estimate of micron's net worth they have a lot of plant property and Equipment as a semiconductor manufacturer if we want a 15 rate of return which is what Warren Buffett looks for from his Investments if their valuation multiples are the same 20 years into the future an estimate of their fair value per share is around 57 down 11 from today's stock price down from our super investors like lilu monish per bright and Sequoia fund were selling out of the company yet at the same time other super investors like David Tepper and Prem Watson were buying in most importantly this analysis is not Financial advice it's not a buy or sell recommendation of any security consult with your financial advisor before making any investment decision in just a minute we'll give our rating to Micron but we need to address something first we've covered the numbers but the qualitative factors may be even more important for their business what are they we've got to start with the bad news first Micron beat on their earnings but they projected a wider loss in their forecast for the next quarter that's a short-term perspective on the business looking at qualitative factors that zoom out a bit number one micron has a high fixed cost base that leaves it vulnerable to under utilization charges and major profit compression when memory markets enter a downturn number two dram and nand are commodity-like products Micron may have little ability to build durable differentiation against competitors number three Micron has meaningful China exposure and bears the risk of further restrictions out of that market hampering its sales there is a brighter spot for the business though let's look at the factors supporting a long thesis number one when memory markets are in an upswing and demand is strong Micron sales growth and profitability can be impressive number two Micron is a major producer of of dram and Nan chips with healthy market share positions allowing it to benefit from secular Trends toward AI 5G and connected cars number three Micron has had strong shareholder returns and its balance sheet is rather strong for a cyclical firm we saw that as the company had a cash position and so far has modestly been able to weather the downturn especially in the cash consumption from their business now let's talk about our rating we've learned in our analysis of Micron they checked the Box on two out of our six metrics they also miss on our bonus semiconductors are a cyclical business Micron is no exception though they may have entered a possible downturn for semiconductors in a better position than some peers Micron operates in an oligopoly Market with SK hynix and Samsung as major competitors that's what likely attracted a lot of these super investors to the business in the first place this industry has been trying to rationalize prices after being pretty terrible historically that might not all be working however as they come company is experiencing a downturn it doesn't help that they've been consuming cash in their business as their revenues have really shrank and their profitability has turned negative part of a lot of the investment thesis for micron is their industry rationalization if that doesn't happen then it makes it more difficult for this business to succeed in the future even as it rides in the back of some of these Mega Trends keep in mind this isn't financial advice right now micron's average free cash flow was above the yield from the 10-year treasury but it didn't look attractive compared to the risk premium we wanted they have a negative cash flow yield today when we performed our discounted cash flow valuation from today's multiples if you believe those assumptions and you want a 15 rate of return an estimate for micron on a per share basis is around 57 down 11 from their current stock price Micron last traded at those levels in March of 2023.
when we look at all of the factors for micron they look like an interesting business for more research dig into the company and read some write-ups check out my affiliate link for Seeking Alpha in the description if you're interested
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