저자: DividendTalks · 외국인
요약 보기
마이크론 실적 발표 후 주가 약 16% 급락. EPS는 소폭 상회했으나 다음 분기 가이던스(매출 약 79억달러, EPS 1.43달러)가 시장 기대치(89.8억/1.91달러)를 크게 하회. 매출총이익률은 39.5%로 전분기보다 개선되고 순이익도 증가. 밸류에이션은 선행PER 12배로 섹터 중앙값 대비 할인. DCF 모델 기준 적정가 138달러(약 58% 상승 여력), 35% 안전마진 적용 시 매수가 124달러 제시. 월가 목표가 140달러.
다듬은 글
yesterday we saw the market Fall by 3% in which was the largest single day drop since August earlier this year and the main reason for that was Jerome pal said that in 2025 there are going to be fewer reductions ahead than what the market wanted to hear but we'll cover this in another episode today our focus is on Micron Technology which reported after the Bell now they are down around 16% and it is likely when the Market opens they will be trading right there towards their 52 we low so what went wrong was it a bad earnings is it an incredibly great opportunity given the fact that we do get a strong buy from Wall Street a double buy from seeking Alf and Quant and when we do come to it later on in the episode an A on valuation A+ on growth and an A+ on profitability so let's first dive into the earnings to understand what went wrong and pretty much the main reason that this company did fall quite significantly was their Q2 guidance which was very weak and did come in considerably lower than what the market wanted to see now in terms of their headline earnings well we do in fact note their EPS was a marginal beat very nice to see and their revenue pretty much came in line 8.71 billion and that was what the market wanted to hear now their next quarter they're anticipating around 7.9 billion to the Top Line and that is quite significantly below what the market anticipated they wanted to hit 8.98 at the bare minimum and we can see the earnings per share expected of 1.43 is also significantly below what the market was anticipating of 1.91 so earnings yes it did look good but their next quarter guidance was very underwhelming and as we continue to say on this channel if a company does not guide at least in line or in fact higher they will be punished and the main reason for that is when we look at overall the S&P 500 a lot of these companies are trading that severe overvaluation based on their forward p in comparison to not just their 5year average but also the modern era average of the S&P overall now just a quick run through of their earnings as we can see 8.7 billion was their top line now that is a nice double digit increase from the previous quarter and when you look at the same quarter last year it is up 84% so they are still growing at what we would consider a fairly attractive rate and in terms of how they performed on the margin well 39.5% we will come to show you that was in fact higher than the previous quarter so that does give us the faith around efficiencies that we always talk about on the channel their bottom line as well 2 billion we're going to show you but not only is their gross margin increasing but so is their net income and possibly we're starting to see signs of where the market has severely overreacted now we always like to draw your attention to in particular the capital allocation of companies and one thing that m Micon technology do a lot and in fact prioritize over the dividend is they do buy a lot of shares and that is a way to return excess cash to investor Pockets not only through dividends but as we said those share BuyBacks they also do pay dividend 1.6 billion in fact over the last few years and in total from 2022 they have returned around 4.8 billion one thing we would say though is in the latest quarter there were no BuyBacks and there will be a dividend paid on January the 15th of 0.115 per share we also just want to highlight here the next quarter as we mentioned unfortunately it was significantly lower than what the market wanted and that is why they are being punished and quite significantly remember our job is to understand is this a great opportunity that market has given us and their gross margin around 38.5 as we saw it was around 39 39.5 in q1 also the last thing that we want to highlight as we have already mentioned it that their gross margin this quarter of 39.5 5% is a lot better than the quarter previous at 36.5 this also extends to their operating margin 27.5% above the 22.5 as well as their bottom line 23.4 above the 17.3 the main reason we are flagging this is because sometimes it does go under the radar but we should identify if we are not just seeing Topline Revenue increases like we have seen this quarter but also whether or not we're getting efficiencies across the margins and Micron have definitely delivered now if we do take a look at this company they are up 27% over the last 12 months bear in mind though when the Market opens this will be significantly lower and over the last 10 years they have outperformed the S&P up 215% again we will come to show you that and in terms of the yield we did mention they are paying the next divid in January at 42% not the greatest but they do a lot of share BuyBacks and we can see here the forward PE at 12 is significantly lower than the sector median and we will come to show you that throughout the the episode so let's take a look at their earnings expectations moving forwards they are still anticipating massive growth in fact three of the next four quarters triple digit and we also like the fact that over the last four they have outperformed four out of four beats and that is a good sign one 100% historical forecasting accuracy and if you look at the EPS anticipated for the next full year that in turn will lower the forward P to just over eight so it is looking very attractive all the signs are pointing in the direction we want to see but let's take a look at the underlining metrics of this company just to refresh whether or not we do get some high quality indicators now dividend safety boardline safe we will cover this we'll also look at these two valuation models but we do have to point out for those that do like dividends it hasn't increased it over the last few years so something just to bear in mind it may put you off this company but as always we like to give you all of the data in terms of the dividend safety score well reaffirmed last month but what this effectively translates to is that there is a moderate risk of a dividend cup over a full economic cycle now the key metric this is from the ' 0709 recession what we can see in terms of sales they have - 18% the S&P itself was -12 During the period And as we mentioned no dividend increases since 2022 but they have been paying a dividend without a reduction for the last 3 years so it is a fairly recent dividend paying company now when we take a look at the valuation based on the 5year average although do bear in mind this hasn't been updated yet for the drop as currently it is sitting even further lower the blue tunnel indicates the intrinsic value and right now given it is below the blue tunnel even the lower end that is a signal of severe undervaluation but do remember we're not looking at any one of these models in isolation and we will conclude when we run it through our own DCF model now dividend yield Theory it does tell 5year average but given they've only recently decided to pay a dividend it would be a bit unreasonable to use that so we focus on the forward PE now it will sit lower when the Market opens but the conclusion is still the same under valuation as it is below the 5year rolling average and on top of that significantly below Information Technology as a whole so Micron is trading at a discount to the sector remember though and that is what we will highlight later on in the episode free cash flow power as always we draw your attention on that as opposed to we want below 50% for the semiconductor space and this is why we draw your attention to the free cash flow as if you look to the earnings you wouldn't have realized but in 2024 they paid out more in dividends than they generated in free cash flow that is why we get the borderline safe score the one nice thing to note is over the next 12 months it is anticipated to come down to 177% now this is a fairly cyclical industry although having said that some semiconductors won't sh through the numbers with Micron Technology we do get that a lot of up and downs year on year in fact two of the last 10 have been negative and in 2024 very low at 11 cents per share nice report over the next 12 months it is anticipated to expand to $2.78 in terms of sales growth again C locality coming right through where we do get five of the last 10 years as negative but 2024 for the full year at 6 2% that is very nice to note but again do Factor this in especially when we do come to our margin of safety later on numerical perspective again you can see the numbers but we want to draw your attention to these shares outstanding we want companies that return excess cash to invest the pockets through those share BuyBacks and over the longer term pretty inconsistent some years they dilute your position some years they do share BuyBacks over the longer term very minimal movement from 1.17 to 1.12 but as we saw in their Capital allocation slide it is becoming more of a priority from management to essentially do share BuyBacks rather than dividends so something again just to digest on in terms of the roic we want 12% or more for this industry not something we get again very inconsistent you do need to Bear all of this in mind when you consider this company as well as the MOs level that you want to use before executing and again that is well reflected on both the operating margin as as well as the free cash flow one thing we would say though is when we were looking at the margins especially in the shorter term they are starting to improve and by quite some distance so that is one thing we do like about Micron although the question remains to be seen can we get consistency moving forwards we then move on to the net debt ebits are the earnings before interest tax depreciation ammortization below 1.5 is what we want to see remember these are nd correlates to Dividend saf the balance sheet strength 65 on a trading 12 month is very low expected to go even lower over the next 12 so their balance sheet as we will come to show you does look very strong and in reality when we do look at the dividend safety we don't believe there will be any issues over the longer term but as always we do need to keep up looking at the data on a quarter by quarter basis now we als highlight two beaten down quality stocks that are massive buyers right now you can grab a copy by clicking on the pin comment below looking at this but we do want to highlight we send one every Monday morning to your inbox where we cover severely undervalued stocks that deserve and you can grab a copy as well of 28 another spreadsheet that highlights right now on to Insider ownership that's very low at 3% with around 70 million worth of sales over the last year although no movement in Q4 in Q3 we see a little bit of selling and in Q2 we do get the bulk at 39 million the most recent one 29th of September selling just under 5,000 shares netting them around half a million dollar as always the information is there if you want to incorporate it into your own investment thesis but not one we particularly use we don't see it as a bearish institutions on the other hand 80% ownership 8 billion worth of sales over the last year we do get a little bit more buying over the same time frame however we do want to draw to attention tha more than they have been buying as always though don't follow institutions or insiders blindly always always do your own due diligence now we their top blind Reven where we did say it was very inconsistent over the longer term but what we really want to draw your attention to is what does the bottom line net income story tell us is it something similar and what in fact we can see is yes like the top line revenue their bottom line is also very up and down year on Year yes it is cyclical but ideally we do want to see a little bit of consistency again these are just points that you do need to think about when considering Micron Technology we then want to move on to the balance sheet a quick health check total cash versus total debt and we can see over the long term cash has been increasing 3 A2 billion in 2015 8.1 in the latest quarter but as always one number here in pure isolation isn't going to tell us anything which is why we compare it numerically and directionally to their total debt which as we can see like their other metrics have been very very inconsistent and it has grown pretty much doubled from 7 billion in 2015 to 14 in the latest quarter now we did look at their net debt to EIT Dart and we did say it does look okay for now it is fairly low but as always these are things you do need to constantly check when they report their earnings and their annual accounts we then just want to show you the cash this company does generate from their operations and very similar to all the other metrics very inconsistent what we do in fact note though is on a training 12 month they've generated around 8.5 billion and we will compare that to the sector as well so let's jump into some gradings the first one is valuation where we get an A this tells us right now based on the forward P the sector median is a lot higher at 26 so if you are buying this company you're in essence getting a 52% discount to the sector median something that is pretty much reinforced over the majority of valuation metrics now we need to understand does it deserve to be trading at a discount and if so what should our MOS level be well look Get an A+ on growth so actually maybe they shouldn't be trading at a discount and we are finding ourselves with a great opportunity year-on-year Revenue growth 62% sector at 4 moving forward 44% sector at 5.6 and we can see the very large growth that they are getting on their ebit Dar both on a year- on-year as well as a forward basis but the main thing we want to highlight here i 51% growth with the sector median at 15.5 we then want to move on to the profitability also looking good with the A+ 22% in terms of the margin not great when the sector is at 50 although bear in mind we did take a look at their most recent quarter at 39% so it is improving and that is really key for this company if they can continue to improve on those margins grow operating and bottom line in terms of the bottom line well 3.1 not far off the sector at 3.8 but the main thing that is really strong with this company in comparison is their cash from operations we already highlighted it 8.51 billion a lot better than the sector at 96 million now quick recap we have a strong buy from W Street with a double buy from seeking alfr and Quant an A on valuation A+ on growth with an A+ on profitability and this is pretty rare to get on this channel looking good in terms of the A's as well as the buy ratings but two things before we jump into our own valuation process how is this company performed against other semis in a comparable size we have Analog Devices Marvel technology as well as a few very well-known others now bear in mind this is before the drop when the Market opens but they were sitting around 28% we do anticipate this to go to around 10% over the last 5 years we can in fact see around 100% and over the last 10 around 23 remember this is total return so it is reinvesting those dividends although they've only been paying for a few years Point here is it has performed fairly decent you may or may not take that over the next 10 but as always past performance is not an indic of the future and we also want to do a very similar comparable against the S&P we do anticipate when the Market opens it will have underformed so far however when we look over the last 5 years we do get out performance over the last 10 as well we do get it although it does look to be a little bit marginal do bear in mind though main reason we highlight this is perhaps you want to consider a lowcost ETF whether that tracks the S&P or in fact a semiconductor ETF like SMH socks Q these are things just to consider now let's jump into our valuation model where we get $138 average growth it will be skewed it has gone from negative to positive for a number of years now we've gone for 15% moving forwards 38 which indicates right now 58% upside full transparency though will show you at 10% intrinsically $100 giving 15% upside and for those that are a lot more bullish at 20% 188 that is 116% upside meaning more than a double from the current price now we take the medium rate where as always we apply a margin of safety 10% execute on this if it meets the $124 not at the 40% level just yet but sitting right now up around the $90 Mark at 35% now based on this latest earnings Wall Street themselves did in fact lower their price Target but it still sits fairly high at $140 they see 61 1% upside and you could argue perhaps a market overreaction coupled with the fact that the whole Market itself did fall after the FED did speak about the interest rates and while we will cover that in another episode you could perhaps consider whether or not a market overreaction has happened in particular to Mu so 35% MOS 61% upside over the next 12 months give us your thoughts is this a company you are looking to add on this dip maybe it's one you're holding or for whatever reason it isn't one you want to consider Maybe for a semiconductor ETF a
Comments 0