Shares of Micron (
MU - Free Report) opened lower on Wednesday after two days of gains on the back of some major announcements, including a new deal with Intel ( INTC - Free Report) . With that said, let’s dive into why the chip giant’s stock might be worth buying right now. Stock Price Movement
Micron stock has skyrocketed 408% over the last two years, which crushes the S&P 500’s 31% climb. Shares of Micron also greatly outperformed its industry’s 99% surge, which includes the likes of Intel, Advanced Micro Devices (
AMD - Free Report) , Broadcom ( AVGO - Free Report) , Nvidia ( NVDA - Free Report) , Texas Instruments ( TXN - Free Report) , and more.
Over the last year, Micron stock has soared 101%, compared to its industry’s roughly 35% surge. Furthermore, shares of Micron have climbed over 21% in the last three months, while its broader industry is up just 3.5%.
Micron’s run of success might deter some investors since it could be hard to replicate this kind of growth. Still, despite Micron’s insane and sustained run, investors should note that the company closed Tuesday below its 52-week high. And there are plenty more reasons to be excited about Micron stock, including its growth prospects and current valuation picture.
But before we jump into growth, it is worth taking a look at some company updates. Micron and Intel announced on Monday that they will produce and ship the “industry's first 4bits/cell 3D NAND technology,” while also noting that they made progress on the development of the third-generation 96-tier 3D NAND structure—which provides a 50% increase in layers.
The company also said it would repurchase $10 billion of outstanding common stock as part of a new plan to return at least 50% of free cash flow to stockholders starting in fiscal 2019. “The data-driven economy will transform nearly every industry, and drive secular growth in demand for memory and storage," CEO Sanjay Mehrotra said.
Furthermore, Micron upped its guidance and now expects current quarter revenues to be in the range of $7.7 billion to $7.8 billion, up from its previous guidance of $7.2 billion to $7.6 billion.
Our current Zacks Consensus Estimates don’t necessarily reflect Micron’s updated quarterly revenue outlook just yet. But investors will be pleased to note that our current estimate of $7.44 billion, would mark a nearly 34% climb from the year-ago period. Looking a bit further ahead, the company’s full-year revenues are projected to soar nearly 44% to reach $29.22 billion.
Transitioning to the other end of the income statement, Micron’s quarterly earnings are projected to skyrocket roughly 81% to touch $2.93 per share. And if that growth projection didn’t impress investors enough, Micron’s full-year earnings are expected to soar over 127% to reach $11.27 per share.
Now that we have covered Micron’s recent business updates, stock price movement, and growth outlook, it’s time to move onto its current valuation, which is impressive, to say the least.
Coming into Wednesday, Micron stock was trading at 5.8X forward 12-month Zacks Consensus EPS estimates, which marks a massive discount compared to its industry’s 13.2X. Over the last two years, Micron stock has traded as high as 32.5X and as low as 4.2X.
Micron stock has traded at a one-year median of 5.5X, against its industry’s 13.9X. Furthermore, Micron stock looks even cheaper compared to Nvidia’s one-year median of 45.6X. Therefore, investors should be able to say with confidence that Micron stock is a great value investment at the moment in a semiconductor market that is set to keep on booming.
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