NSD: MU - Semiconductors Grade Earnings Last Earnings Release 09/27/2017 Last Qtr. ctual vs. Est. $2.02 / $1.81 Next Release 09/28/2017 $1.82 Year Ending 08/31/2017 $2.15 Quick Facts Dividend Yield N/ 52 Wk High $45.60 52 Wk Low $17.71 Short Interest 0% of float $45.60 11/13/2017 Rated 'BUY' since Jul 12th, 2017, when it was upgraded from 'HOLD' Year Ending 08/31/2018 $2.51 Market Cap $52.6B Overview Company Scores Near Perfect Rating MarketGrader currently has a BUY rating on Micron Technology, Inc. (MU), based on a final overall grade of scored by the company's fundamental analysis. scores at the 100th percentile among all 5810 North merican equities currently followed by MarketGrader. Our present rating dates to July 12, 2017, when it was upgraded from a HOLD. With an overall grade of, is the highest graded company in the Semiconductors sub-industry, followed by Skyworks Solutions, Inc. (SWKS), with an overall grade of 79.3. The stock, up 62.95% in the last six months, has outperformed both the Semiconductors group, up 20.87% and the S&P 500 Index, which has returned 9.25% in the same period. Please go to pages two and three of this report for a complete breakdown of MU's fundamental analysis. Price, Rating and Sentiment History - 2 Years 1
NSD: MU - Semiconductors Growth The Company's Growth Indicators are Very Strong cross the Board Sugesting Market Share Gains Micron Technology,, which reported $6.14 billion in total revenue last Market Growth LT B- quarter, appears poised to reverse a trend of anemic long term sales growth following its most recent results. This latest report represents a Market Growth ST + remarkable 90.80% increase from its total sales of $3.22 billion recorded EPS Growth + during the same quarter last year. In comparison, the $20.32 billion in revenue booked by the company during the last 12 months represents Growth Potential + only a 24.23% increase from the $16.36 billion booked in the same period ended three years ago. This makes next quarter's report very important to Earnings Momentum help investors determine if the latest jump was attributed to a one-time gain or if it represents the beginning of a positive growth trend. Profits Earnings Surprise grew very strongly last quarter compared to a year ago while full year net income showed healthy gains from three years before. Micron Technology, reported a Third quarter profit of $2.37 billion, reversing a loss of $-170.00 million (excluding extraordinary items) recorded in the year-ago period; 12- month trailing net of $5.09 billion reported in the period ended ugust 31, 2017 was 67.13% higher than the $3.04 billion profit reported for the same period ended three years earlier. The company's margins have been expanding consistently in the last three quarters, especially with an impressive 925.68% average increase in cash flow, operating and net margins during the latest quarter compared to the year ago period. fter reporting earnings on September 27, 2017 that beat analysts' consensus estimates by 11.60%, the company's stock jumped 11.06% as investors welcomed the report. Micron Technology,'s latest earnings report extended its excellent earnings surprise record as it has beaten the consensus estimate by an average of 28.31% over its last six announcements. Revenue Qtrly. 08/31/2017 $6.1B Revenue Qtrly. Year go $3.2B Revenue 1 Yr. Chg. 90.8% Revenue 12 Mo. Tr. Latest $20.3B Revenue 12 Mo. Tr. 3Y go $16.4B Revenue 12 Mo. Tr. 3Y Chg. 24.23% Net Income Qtrly. 08/31/2017 $2.4B Net Income Qtrly. Year go ($170M) Net Income 1 Yr. Chg. 1,292.94% Net Income 12 Mo. Tr. Latest $5.1B Net Income 12 Mo. Tr. 3Y go $3B Net Income 12 Mo. Tr. 3Y Chg. 67.13% Value - Company's Shares re ttractively Priced Considering the Strength of its Overall Fundamentals Shares of Micron Technology, are trading currently at 5.78 times 12- Capital Structure B- month earnings. This P/E ratio represents a 80.66% discount to the MarketGrader-calculated "optimum" P/E ratio of 29.86, which is based on P/E nalysis + the company's two-year EPS growth rate. ccording to this calculation, Price/Book Ratio which looks at the company's growth across rolling 12-month periods, Micron Technology,'s earnings per share have grown at an impressive Price/Cash Flow Ratio annualized rate of 44.17% in the last four years. The combination of such a high growth rate with an apparent margin expansion probably means Price/Sales Ratio - the company has been gaining market share in recent quarters without sacrificing financial performance, evidenced by its superior overall Market Value Profitability grade. This combination offers a strong case for future gains in the stock price. The stock also trades at 5.78 times forward earnings estimates for the next four quarters, lower than its trailing P/E and the S&P 500 index's forward P/E of 15.20. By placing a lower multiple on the company's future earnings than it does on the market as a whole, investors may see the company as financially strong but with relatively poor growth prospects. This may offer a valuable opportunity for patient investors willing to wait for future earnings reports. Micron Technology,'s current market value is 3.53 times its tangible book value, which excludes intangible assets such as goodwill; this valuation seems attractive, especially considering that only 17.60% of the company's total stockholders' equity is based on intangible assets. When the value of those assets is added back into total book value, the price to book ratio is an even lower 2.91. Based on the $6.87 in cash flow per share generated by the company in the last twelve months, at the current price of $45.60 the stock trades at 6.64 times cash flow, an attractive valuation considering the strength of its overall fundamentals. Its stock also trades at 2.50 times trailing 12-month sales, a 36.57% discount to its industry's average of 3.93. Our final value indicator looks at the relationship between the company's current market capitalization and its operating profits after deducting taxes. From this perspective Micron Technology,'s market cap of $52.59 billion, which is only 5.87 times larger than its latest quarterly net income (plus depreciation), seems like an attractive valuation. P/E Ratio 12 Mo. Tr. 08/31/2017 9.38 Optimum P/E Ratio 29.86 Forward P/E Ratio 5.78 S&P 500 Forward P/E Ratio 15.20 Price to (Tangible) Book Ratio 3.53 Price-to-Cash Flow Ratio 6.64 Price/Sales Ratio 2.50 2
NSD: MU - Semiconductors Profitability sset Utilization Capital Utilization - Operating Margins - Relative Margins + Return on Equity - Quality of Revenues + profitable growth. Profitability Record Is Excellent cross the Board Suggesting a Very Well Managed Operation Micron Technology, is a very profitable company with strong overall indicators in this section of our analysis. The company's different measures of return to shareholders and margins are typically above those of its peers. In the last four quarters Micron Technology, earned a profit of $5.09 billion, equivalent to 25.04% of its sales in the period. The average operating margin for the Semiconductors industry was 13.64% during the same period, 98.64% below the company's 28.94%. Micron Technology,'s return on equity--an important measure used by MarketGrader to gauge management efficiency--is very strong, at 27.33% based on how much the company has earned in the last year. This represents an improvement from the year-earlier -2.28% return on equity, a very healthy sign of In light of the company's strong performance its capital structure might be too conservative, with total debt being only a fraction of its total equity. Its long term debt accounts for only 34.70% of total capital. Micron Technology,'s core earnings, a very important measure of long term earnings power, have grown a remarkable 203.09% in the last twelve months relative to the equivalent period ended a year earlier. The company's twelve month trailing EBITD--which looks at income before subtracting interest expense, income taxes, depreciation and amortization--was $9.72 billion compared to $3.21 billion a year ago. Cash Flow Company's Cash Flow Is Very Well Managed as Our nalysis Reflects a Very Healthy Operation Micron Technology,'s cash flow grew considerably in its latest quarter to Cash Flow Growth + $3.20 billion, a 257.48% increase from $896.00 million reported in the year earlier period. When compared to the 157.36% increase in cash flow EBIDT Margin in the last twelve months it seems like the rate of growth is accelerating, Debt/Cash Flow Ratio + which could have a very positive impact on earnings growth in coming quarters. The company's liquidity is not only remarkable but the current Interest Cov. Capacity + amount of debt it carries relative to the cash flow it generates from tis operations is even lower now than it was a year ago. Its net debt (total Economic Value B debt minus cash on hand) at the end of its last quarter was $5.73 billion, only 1.61 times bigger than its $3.55 billion in EBITD. This ratio fell by Retention Rate + an impressive 78.57% from the year earlier period, when EBITD was $732.00 million. This reduction means the company is very well capitalized and has room to expand its leverage if necessary to pursue new growth opportunities without unduly impairing its liquidity. lso, in a few more signs that Micron Technology, is managing its balance sheet very conservatively, its total debt as a percentage of total capital was reduced during the last twelve months while its cash on hand grew. Total debt now represents 37.46% of total capital compared to 45.07% a year earlier, while the company had $5.43 billion in cash on hand last quarter, 23.42% more than it did at the end of the year earlier quarter. These developments enhance the company's substantial flexibility in pursuing future growth opportunities and improve total returns to its shareholders. MarketGrader's Economic Value indicator looks at the company's returns on invested capital after measuring the cost of obtaining it and of keeping investors' capital tied up in its business. In this case, Micron Technology, had $28.51 billion in invested capital as of its most recently reported quarter, on which it generated a 20.63% return based on 12-month trailing operating income. Its total after tax cost of capital was 12.33% during the same period, most of it associated with its weighted cost of equity, which was 10.50% vs. its 1.83% weighted cost of debt. Deducting these costs from the total return on investment translates into Micron Technology,'s economic value added (EV) of 8.30%. While not outstanding, this represents and acceptable true economic profit after accounting for both operating and capital costs. Micron Technology, does not pay a dividend and hasn't done so within at least the last five years. Cash Flow Qtrly. 08/31/2017 $3.2B Cash Flow Qtrly Year go $896M Cash Flow 1 Yr. Chg. 257.48% Cash Flow 12 Mo. Tr. Latest $8.2B Cash Flow 12 Mo. Tr. 3Y go $5.7B Cash Flow 12 Mo. Tr. 3Y Chg. 43.06% Free Cash Flow Last Qtr. $1.9B Economic Value Total Invested Capital $29.8B Return on Inv. Capital 20.63% Weighted Cost of Equity 10.50% Weighted Cost of Debt 1.83% Total Cost of Capital 12.33% Economic Value dded 8.30% 3
NSD: MU - Semiconductors Profile provides semiconductor solutions. It manufactures and distributes semiconductor solutions. It manufactures and markets DRM, NND Flash and NOR Flash memory, as well as other memory technologies, packaging solutions and semiconductor systems for use in computing, consumer, networking, automotive, industrial, embedded and mobile products. The company operates through four segments: Compute and Networking Business Unit (CNBU), Mobile Business Unit (MBU), Storage Business Unit (SBU) and Embedded Business Unit (EBU). The CNBU segment includes DRM and NOR Flash products sold to the computing, networking, graphics and cloud server markets. The MBU segment includes DRM, NND Flash and NOR Flash products sold to the smartphone, feature phone and tablet mobile device market. The SBU segment includes NND Flash components and SSDs sold into enterprise and client storage, cloud and removable storage markets. SBU also includes NND Flash products sold to Intel through its IMFT joint venture. The EBU includes DRM, NND Flash and NOR Flash products sold into automotive and industrial applications, as well as the connected home and consumer electronics markets. Micron Technology was founded in October 1978 and is headquartered in Boise, ID. Key Facts: 8000 S. Federal Way Boise,ID 83716-9632 Phone: www.micron.com Biggest Company in Sub-Industry Taiwan Semiconductor Manu Grade 68.7 Market Cap:$217.87 billion Smallest Company in Sub-Industry MoSys, Inc. (MOSY) Grade 17.0 Market Cap:$5.41 million MarketGrader Dilution nalysis Impact of Change in Shares on EPS - Q3 2017 Dilution Summary Income Statement Last Qtr (08/2017) 12 Mo. Trailing Revenue $6.1B $20.3B *EPS Latest $1.99 *EPS Year go ($0.16) EPS Change 1 Yr. 1,317% C. Shares - Latest(M) 1,187 C. Shares - Yr go(m) 1,037 C. Shares - 1Yr Chg. 14% EPS if Yr. go Shares $2.28 EPS Chg. if Yr. go 1,493% EPS Loss from Dilution ($0.29) *Earnings per share are based on fully diluted net income per share excluding extrodinary items. This number may not match the headline number reported by the company. Op. Income $2.5B $5.9B Net Income $2.4B $5.1B *EPS $1.99 0 *Earnings per share are based on fully diluted net income per share excluding extrodinary items. This number may not match the headline number reported by the company. Balance Sheet Total ssets Total Debt Latest $35.3B $11.2B Stockholders Eq. $18.6B ll numbers in millions except EPS Ratios Price/Earnings (12 mo. trailing) 9.38 Price/Tangible Book 3.53 Price/Cash Flow 6.64 Price/Sales 2.50 Debt/Cash Flow 136.82 Return on Equity 27.33% Gross Margin (12 mo. trailing) 50.70% Operating Margin (12 mo. trailing) 28.94% Total ssets Intangible ssets Long Term Debt Total Debt Book Value Enterprise Value $35.3B $3.3B $9.9B $11.2B $18.6B $5.7B Gross Margin last Qtr. 50.70% EBITD Margin last Qtr. 57.82% Operating Margin last Qtr. 40.27% Operating Margin Sub-Industry vg. 13.64% Operating Margin 12 mo. trailing 28.94% Net Profit Margin Last Qtr. 38.58% Net Profit Margin (12 mo. trailing) 25.04% 4
NSD: MU - Semiconductors Top Down nalysis Technology Stocks in Sector: 781 Buys: 126 (16.13%) Holds: 119 (15.24%) Sells: 536 (68.63%) No. of stocks at: 52-Wk. High: 41 52-Wk. Low: 31 bove 50 & 200-day M: 368 Below 50 & 200-day M: 239 Semiconductors Stocks in Sub-Industry: 66 Buys: 18 (27.27%) Holds: 9 (13.64%) Sells: 39 (59.09%) No. of stocks at: 52-Wk. High: 5 52-Wk. Low: 0 bove 50 & 200-day M: 46 Below 50 & 200-day M: 10 # Ticker Grade Sentiment Name Price Next EPS 1 MU 3 P $45.60 09/28/2017 2 YY 90.66 P YY, Inc. Sponsored DR Class $90.60 08/17/2017 3 OI 89.96 N pplied Optoelectronics, Inc. $44.58 11/09/2017 4 LRCX 86.72 P Lam Research Corporation $209.23 10/25/2017 5 LPTH 83.89 N LightPath Technologies, Inc. Class $2.73 09/15/2017 6 MT 81.86 N pplied Materials, Inc. $57.03 11/16/2017 7 MKSI 81.42 P MKS Instruments, Inc. $104.15 01/31/2018 8 TER 81.10 P Teradyne, Inc. $43.85 01/24/2018 9 UCTT 80.21 N Ultra Clean Holdings, Inc. $24.33 02/20/2018 10 NTES 79.95 N NetEase, Inc. Sponsored DR $302.16 08/16/2017 # Ticker Grade Sentiment Name Price Next EPS 1 MU 3 P $45.60 09/28/2017 2 SWKS 79.26 N Skyworks Solutions, Inc. $110.30 01/18/2018 3 INTC 78.26 N Intel Corporation $45.75 01/18/2018 4 CRUS 78.17 N Cirrus Logic, Inc. $55.91 01/25/2018 5 SEDG 76.16 N SolarEdge Technologies, Inc. $37.50 11/29/2017 6 NVD 73.99 P NVIDI Corporation $212.63 02/14/2018 7 TXN 72.06 N Texas Instruments Incorporated $97.03 01/23/2018 8 TSEM 71.36 N Tower Semiconductor Ltd $33.88 11/14/2017 9 SIMO 68.82 N Silicon Motion Technology Corporation $47.46 01/30/2018 10 TSM 68.66 P Taiwan Semiconductor Manufacturing $42.01 10/20/2017 1. Price Trend. + 2. Price Momentum. + 3. Earnings Guidance. + 4. Short Interest. N/ 8.0 Copyright 2010 MarketGrader.com Corp. ll rights reserved. ny unauthorized use or disclosure is prohibited. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or any options, futures or other derivatives related to such securities ("related investments"). The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regards to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. ccordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. MarketGrader does not make markets in any of the securities mentioned in this report. MarketGrader does not have any investment banking relationships. MarketGrader and its employees may have long/short positions or holdings in the securities or other related investments of companies mentioned herein. Officers or Directors of MarketGrader.com Corp. are not employees of covered companies. MarketGrader or any of its employees do not own shares equal to one percent or more of the company in this report. 5