저자: ParkevTatevosian,CFA · 외국인
요약 보기
마이크론은 AI 수요와 메모리 가격 상승으로 실적이 개선 중이며 업사이클이 최소 2년 지속될 것으로 봄. 설비투자 확대와 미국 공장 리스크가 주가 부진 요인. 선행 PER 7.95배, DCF 적정가 약 149달러로 저평가로 판단. 실적 발표 전 매수 또는 분할 매수를 제시하며, 장기 투자 관점에서 리스크 대비 보상이 유리하다고 주장.
다듬은 글
Micron Technology is scheduled to report first quarter results after the markets close on December 18th, 2024. The company has experienced a bit of a headwind regards to its stock price, but the business performance is improving significantly. So, understandably, investors are asking, should they buy Micron Technology stock before it reports those quarterly results on December 18th?
That's the question I'll answer in this video by looking at the company's prospects, evaluating what investors can expect from the company when it reports its results, and answering whether or not you should buy before or after earnings, or if you should buy the stock at all. It's a lot to cover in this short video, so let's get right into it after this brief message from my sponsor.
, I highlighted in the introduction of the video that the company's business performance has been excellent. Operating cash flow of 8.51 billion dollars in fiscal year 2024, compared to just 1.56 billion in the prior year. That's a more than 5x improvement in its cash flow year over year. Now, that's because the cyclicality of the business causes those kinds of fluctuations, which I'll share with you looking back longer term the business why it's so cyclical, and you can see the results of that impact.
So, the management's saying that we are entering fiscal year 2025 with the best competitive positioning in Micron's history. We forecast record revenue in the upcoming quarter and substantial revenue records with significantly improved profitability in 2025. This is what they're forecasting for 2025.
And despite these excellent forecasts and these improving prospects, Micron stock price is not performing all that well. And I'll share with you in a little bit why that's the case. So, in the latest quarter, revenue jumped to 7.75 billion, up from 4 billion in the same quarter last year. While operating income jumped to 1.5 billion from a loss of 1.5 billion in the same quarter last year.
So, you can see the business performing well, but it's compared to those bottoms in 2023. The semiconductor industry overall was coming out of that bottom because there was an overhang coming out of the pandemic where there were supply chain shortages, and then there was overages, and then in 2023 there was a rebalancing, and 2024 is when you're coming off of those rebalancings, and now you're starting to see the cyclical upswing, and that is magnified by the increahich is increasing demand for computing power the kind that Micron Technology provides.
But the reason the stock price has not performed well is because of the , capital expenditures came in at 3 billion dollars. For the full year, it was 8 billion dollars. And management has forecasted these investments will continue as the company's increasing manufacturing capacity, capitalizing on the benefits provided by the United States government for companies investors are spooked because of the difficulties that Intel faced trying the same strategy.
So, investors are spooked that Micron may face similar difficulties in ramping up the technology before demand comes online in future years, and the competitiveness of building these manufacturing facilities in the United States compared to the manufacturing facilities outside the United States, which offer significantly lower production costs.
And so, investors are concerned about this, rightfully so. It is a risky endeavor, but that risk is mitigated to some degree with the billions of dollars that the US government is providing companies like Micron to build these manufacturing facilities. And if you look back over the last decade, you can see the cyclicality of the business.
Look at these ups and downs here. This is revenue, operating income, and cash flow from operations in the purple, orange, and blue, respectively. And you can see that cyclicality of the business. But you can also see that at the peak, the previous peak, the cash flow from operations came in at above 8.5 billion dollars, and the operating income came in at significantly higher levels.
You can see these at above 12 billion dollars at their peaks in 2019. Now, these previous highs have not reached those previous peaks, but given the rising demand, given what Micron and what I've heard from all , you're going to have increasing inputs into these devices. So, that's more DRAM in every device, and more SSD, more storage in every device.
And that's in devices ranging from smartphones to laptops to desktop computers to data centers. Everywhere you're having increasing inputs of these technologies, and that's great news for Micron. Also, another interesting data point came from Apple. In Apple's latest quarterly earnings call, Apple said that the prices for DRAM and storage are higher than usual.
And of course, that's great for Micron Technology. That's precisely what the company sells, DRAM and storage. So, if the prices are higher, that means Micron is getting a higher average price per unit sold, and you're also getting an increase in the number of units inside devices. Phones are getting more memory, devices are getting more memory, and the personal computer industry especially, given this upgrade cycle, is going to have increasing inputs of these technologies.
And the PC industry overall is expected to grow significantly starting in 2025, 2026. They're going to be peak years for the personal computing industry. So, you can already see the upturn for Micron Technology has started, but I think it's still early days. I think they've got at least two more years of upturn here.
Given the trends I'm seeing in the personal computer industry, and the trends in data centers, and of course in smartphones that are going to require these increasing units. So, it's looking strong for Micron for at least two years, and probably long after that as well. So, looking ahead, Micron is forecasting 8.7 billion dollars of revenue in the first quarter with earnings per share of a dollar 54.
Now, if earnings per share comes in a little bit above or a little bit below, or revenue comes in a little bit above, a little bit below, I don't think that's going to have a major impact on the company's stock price following the earnings release. More so than the quarterly revenue and earnings number, it's going to be the forecast ahead both in terms of demand for its products and the capital expenditures.
How much are they going to be spending on CapEx? If the industry headwinds have changed their outlook on CapEx spending, or are they increasing their CapEx? The results of the recent election and the geopolitical headwinds with tariffs, etc., how have those changed Micron's outlook? I think those implications are going to have a bigger impact on its stock price following the results more so than these headline numbers of revenue and earnings per share.
So, Micron's stock price is now trading at a forward price to earnings of 7.95, which I think is a ridiculously cheap valuation for this stock if you're measuring by the forward price to earnings ratio. Now, another method of valuation is the discounted cash flow valuation model, which I have done for Micron stock, and according to my calculation, I have the intrinsic value per share at around 149 dollars.
So, regardless of whether you're using the forward PE multiple or the discounted cash flow valuation model, both have indicated to me that Micron stock looks undervalued. So, if you're asking me the question whether or not you should buy the stock before earnings, or if you should buy it after earnings, I would say Micron stock to me is undervalued enough that it provides a enough margin of safety to buy before earnings to buy before the company announces earnings.
But if you want to lower your risk, you can also buy half before earnings and half after earnings if you prefer to decrease your risk because there's always increasing volatility surrounding an earnings release. But in my opinion, the stock is undervalued enough where you can make an allocation before it announces earnings without feeling like you're overpaying for the investment.
That isn't to say that there could be a big downside following the earnings release if the company's management sounds pessimistic about the future, downgrades guidance, etc. Still, I think the risk versus reward favors long-term investors for Micron Technology stock, whether you try to time it or not.
I don't like to time the market, so you can go half before and half after. Whatever you prefer, depending on your risk tolerance. .
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