Have you been paying attention to shares of Micron Technology (MU - Free Report) ? Shares have been on the move with the stock up 33.8% over the past month. MU hit a new 52-week high of $63.98 in the previous session. Micron Technology has gained 52.3% since the start of the year compared to the 4.8% move for the Computer and Technology sector and the 52.3% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on March 22, 2018, Micron Technology reported EPS of $2.82 versus the Zacks Consensus Estimate of $2.76 while it beat the consensus revenue estimate by 1.7%.
For the current fiscal year, Micron Technology is expected to post earnings of $11.53 per share on $29.62 billion in revenues. This represents a 132.46% change in EPS on a 45.73% change in revenues. For the next fiscal year, the company is expected to earn $10.75 per share on $30.79 billion in revenues. This represents a year-over-year change of -6.77% and 3.96%, respectively.
Micron Technology may be at a 52-week high right now, but what might the future hold for MU? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Micron Technology has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 5.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.6X versus its peer group's average of 7.6X. Additionally, the stock has a PEG ratio of 0.54. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Micron Technology currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 or 2 (Buy) and Style Scores of A or B, it looks as if Micron Technology passes the test. Thus, it seems as though MU shares could have potential in the weeks and months to come.