Friday, March 27, 2015 11:05:17 AM
Mar. 27, 2015 10:49 AM ET | About: Micron Technology Inc. (MU), Includes: SNDK
Disclosure: The author is long MU, INTC, SNDK. (More...)
Summary
Micron will benefit from stronger demand for flash memory and solid-state drives since the new 3D NAND technology offers lower cost and higher storage flash memory.
Micron has compelling valuation measures and high earnings growth prospects; its valuation metrics are among the best in all S&P 500 technology companies.
In my view, Micron stock is extremely undervalued, and now is an excellent opportunity to buy the stock at a very cheap price.
Yesterday, on March 26, investors in flash memory producing companies were exposed to two significant developments. The first caused SanDisk (NASDAQ:SNDK) to plunge 18.45%, and the other left competitor Micron Technology (NASDAQ:MU) with a small gain despite an adverse market behavior.
SanDisk cut its revenue forecast after lower-than-expected sales from business products, delays to product qualification and lower prices. The company said it now expects earnings for the quarter that ends March 29 to be about $1.3 billion, down from a previously forecasted $1.4 billion to $1.45 billion. It is the second quarter in a row that SanDisk lowered its earnings forecast. As a result, many analysts downgraded the stock, and its share price dived to $66.20, a level not seen from late 2013 and 38.5% below it 52-week high of $107.65 from July 16, 2014.
On the other hand, Micron, which is also an important flash memory producer, has not followed SanDisk shares' plunge and its stock gained 0.34%. On the same day, Micron and Intel (NASDAQ:INTC) revealed the availability of their 3D NAND technology, which is according to the companies, the world's highest-density flash memory. Flash is the storage technology used inside the lightest laptops, fastest data centers, and nearly every cell phone, tablet and mobile device.
According to Micron, this new 3D NAND technology, which was jointly developed by Intel and Micron, stacks layers of data storage cells vertically with extraordinary precision to create storage devices with three times higher capacity than competing NAND technologies. This enables more storage in a smaller space, bringing significant cost savings, low power usage and high performance to a range of mobile consumer devices as well as the most demanding enterprise deployments.
The new 3D NAND technology stacks flash cells vertically in 32 layers to achieve 256Gb multilevel cell [MLC] and 384Gb triple-level cell [TLC] die that fit within a standard package. The 256Gb MLC version of 3D NAND is already sampling with select partners, and the 384Gb TLC design will be sampling later this spring. The fab production line has already begun initial runs, and both devices will be in full production by the fourth quarter of this year. Both companies are also developing individual lines of SSD solutions based on 3D NAND technology and expect those products to be available within the next year.
In my opinion, this new major development will benefit both companies. By producing lower cost and higher storage flash memory and solid-state drives, the demand for these products can increase exponentially. Despite the current relatively high price of flash memory, Apple (NASDAQ:AAPL) users are already upgrading to iPhones with more storage capacity, and emerging device makers embed more chips into future phones. In addition, continued growth in flash demand from cloud-service data farms, and ongoing transition away from HDDs and toward SSDs in client PC and server markets will contribute to the growth in the demand for NAND Flash Memory.
SanDisk is also developing 3D NAND technology. On March 25, the company announced that it has successfully developed its 48 layer second generation 3D NAND, also referred to as BiCS2. Pilot production will commence as planned in the second half of 2015 in the Yokkaichi joint venture facility. However, meaningful commercial production is targeted only for 2016.
Micron's last stock price of $26.66 is 27.1% below it 52-week high of $36.59 from December 05, 2014.
(click to enlarge) (click link below for tables/charts)
Chart: TradeStation Group, Inc.
In my opinion, Micron stock is extremely undervalued, and now is an excellent opportunity to buy the stock at a very cheap price. Just let's look at its valuation metrics.
Micron's EV/EBITDA ratio of 5.25 is the third-lowest among all 65 S&P 500 technology companies.
(click link below for tables/charts)
Source: Portfolio123
According to James P. O'Shaughnessy, the Enterprise Value/EBITDA ratio is the best-performing single value factor. In his impressive book "What Works on Wall Street," Mr. O'Shaughnessy demonstrates that 46 years back testing, from 1963 to 2009, have shown that companies with the lowest EV/EBITDA ratio have given the best return.
Micron's long-term PEG ratio of 0.60 is the second-lowest among all 65 S&P 500 technology companies.
(click to enlarge) (click link below for tables/charts)
Source: Portfolio123
In addition, Micron's price-to-free-cash-flow ratio of 10.64 is the fifth-lowest among all S&P 500 technology companies, and its P/E ratio of 8.60 is the second-lowest among all S&P 500 technology companies.
Summary
In my opinion, Micron will benefit from stronger demand for flash memory and solid-state drives since the new 3D NAND technology offers lower cost and higher storage flash memory. Micron has compelling valuation measures and high earnings growth prospects; its valuation metrics are among the best in all S&P 500 technology companies. It is hard to find a large cap company with such low ratios: EV/EBITDA at 5.25, PEG ratio at 0.60, price-to-free-cash-flow ratio at 10.64 and P/E ratio at 8.60. In my view, Micron stock is extremely undervalued, and now is an excellent opportunity to buy the stock at a very cheap price.
______________________________________________
http://seekingalpha.com/article/3033666-micron-stock-a-buy-despite-rival-sandisks-lower-forecast?auth_param=udil:1ahargc:faba34e50e8a5a24409ecc5f49f81ecb&uprof=46
MU
Recent MU News
- Micron Technology, Inc. Reports Results for the Fourth Quarter and Full Year of Fiscal 2024 • GlobeNewswire Inc. • 09/25/2024 08:07:05 PM
- U.S. Stocks Close Slightly Higher; Dow, S&P Post New Highs • IH Market News • 09/23/2024 08:44:00 PM
- Micron Expands SSD Portfolio With New Crucial P310 2280 Gen4 SSD, Bringing High-Octane Performance To Gamers and Creators • GlobeNewswire Inc. • 09/17/2024 01:00:00 PM
- Investors Anticipate Retail Sales Data and Fed Decision; Oil Prices Dip as Investors Weigh U.S. Production • IH Market News • 09/17/2024 10:42:43 AM
- Microsoft Boosts Share Buyback, Raises Dividends by 10%, Intel Secures Chip Deal with Amazon • IH Market News • 09/17/2024 10:40:35 AM
- OpenAI Unveils Strawberry AI Model Series; Boeing Stock Falls 4% Amid Strike; HR Surges 20% on Growth Forecast • IH Market News • 09/13/2024 10:12:55 AM
- Micron to Report Fiscal Fourth Quarter and Full-Year 2024 Financial Results on September 25, 2024 • GlobeNewswire Inc. • 08/28/2024 08:01:00 PM
- Google Forced to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Google Mandated to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/12/2024 10:31:17 PM
- Intel Sued by Shareholders; JPMorgan Raises Chance of Recession; Roblox Blocked in Turkey; Micron Resumes Share Buyback • IH Market News • 08/08/2024 09:48:43 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/07/2024 12:45:51 PM
- Micron Develops Industry’s First PCIe Gen6 Data Center SSD for Ecosystem Enablement • GlobeNewswire Inc. • 08/05/2024 01:03:00 PM
- Micron Technology Announces Upcoming Investor Events • GlobeNewswire Inc. • 08/01/2024 08:01:00 PM
- Micron Announces Volume Production of Ninth-Generation NAND Flash Technology • GlobeNewswire Inc. • 07/30/2024 01:03:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/23/2024 10:29:44 PM
- Micron Introduces the World’s Fastest Data Center SSD • GlobeNewswire Inc. • 07/23/2024 01:01:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/19/2024 08:05:25 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 11:06:24 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 11:05:26 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 11:04:53 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 11:04:13 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 11:03:38 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 11:03:01 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 11:02:01 PM
North Bay Resources Commences Operations at Bishop Gold Mill, Inyo County, California; Engages Sabean Group Management Consulting • NBRI • Sep 25, 2024 9:15 AM
CEO David B. Dorwart Anticipates a Bright Future at Good Gaming Inc. Through His Most Recent Shareholder Update • GMER • Sep 25, 2024 8:30 AM
Cannabix Technologies and Omega Laboratories Inc. Advance Marijuana Breathalyzer Technology - Dr. Bruce Goldberger to Present at Society of Forensic Toxicologists Conference • BLOZF • Sep 24, 2024 8:50 AM
Integrated Ventures, Inc Announces Strategic Partnership For GLP-1 (Semaglutide) Procurement Through MedWell USA, LLC. • INTV • Sep 24, 2024 8:45 AM
Avant Technologies Accelerates Creation of AI-Powered Platform to Revolutionize Patient Care • AVAI • Sep 24, 2024 8:00 AM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM