Insights

• Micron is experiencing strong revenue growth, driven by increasing demand for memory and storage solutions across various end markets, particularly in the data center segment.
• The company's profitability is improving significantly, driven by higher average selling prices, manufacturing cost reductions, and effective expense control.
• Micron's liquidity position is healthy, but the company is actively deploying capital, which is reflected in the decreasing trend in cash and short-term investments.
• The company's solvency appears strong, with a low debt-to-equity ratio and a healthy debt-to-EBITDA ratio. However, the increasing debt levels indicate that Micron is leveraging its balance sheet to fund its growth initiatives.
• Micron's operational efficiency is improving, as evidenced by the increasing return on assets and return on equity ratios.
• The company's cash flows from operations are increasing significantly, driven by strong revenue growth and improved profitability.
• Micron's free cash flow is robust, providing financial flexibility for future investments and debt repayment.
• The company's future outlook is positive, driven by strong revenue growth, improving profitability, and a robust cash flow generation.
• Micron faces several risk factors, including volatility in average selling prices, geopolitical risks, and competition.
• The company's investments in capacity expansion projects and new technologies are expected to drive future growth.
• Micron's financial flexibility is expected to remain strong, providing the company with the resources to navigate potential challenges and capitalize on growth opportunities.

Analysis

• Revenue - Micron's revenue is experiencing strong growth, driven by increasing demand for memory and storage solutions across various end markets, particularly in the data center segment. - The company's revenue growth is outpacing the industry average, indicating a strong competitive position and market share gains. - The company's revenue growth is expected to continue, driven by the continued growth of the data center market and Micron's strong position within it.
  • Profitability
    • Micron's profitability is improving significantly, driven by higher average selling prices, manufacturing cost reductions, and effective expense control.
    • The company's profitability metrics, including gross margin, operating margin, and net profit margin, are all significantly higher than the industry average, indicating a strong competitive advantage.
    • The company's profitability is expected to continue to improve, driven by continued data center growth, favorable product mix, and improved NAND market conditions.
  • Liquidity
    • Micron's liquidity position is healthy, with a current ratio greater than 1. However, the decreasing trend in cash and short-term investments suggests that the company is actively deploying capital.
    • The company's quick ratio is lower than the industry average, indicating a lower level of liquidity than its peers.
    • Micron's liquidity position is expected to remain strong, given its healthy cash flow generation and access to capital markets.
  • Solvency
    • Micron's solvency appears strong, with a low debt-to-equity ratio and a healthy debt-to-EBITDA ratio. However, the increasing debt levels indicate that Micron is leveraging its balance sheet to fund its growth initiatives.
    • The company's debt levels are lower than the industry average, indicating a more conservative financial leverage strategy.
    • Micron's solvency is expected to remain strong, given its robust free cash flow generation and manageable debt burden.
  • Operational Efficiency
    • Micron's operational efficiency is improving, as evidenced by the increasing return on assets and return on equity ratios.
    • The company's enterprise value-to-EBITDA and enterprise value-to-sales ratios are significantly lower than the industry average, indicating that Micron is valued more favorably by the market relative to its earnings and sales.
    • Micron's operational efficiency is expected to continue to improve, driven by investments in new technologies and capacity expansion projects.
  • Cash Flow Analysis
    • Micron's cash flows from operations are increasing significantly, driven by strong revenue growth and improved profitability.
    • The company's capital expenditures are increasing, reflecting its commitment to expanding its production capacity.
    • Micron's free cash flow is robust, providing financial flexibility for future investments and debt repayment.
    • The company's cash flow generation is expected to continue to grow, driven by strong revenue growth and improved profitability.
  • Risk Factors
    • Volatility in average selling prices for memory and storage products: The memory and storage industry is cyclical, and Micron's financial performance can be significantly impacted by fluctuations in average selling prices.
    • Factors that may adversely affect gross margins: Micron's gross margins can be affected by factors such as manufacturing costs, product mix, and competition.
    • Geopolitical and other risks associated with international operations: Micron operates in a global market and faces geopolitical risks, including trade tensions, export restrictions, and tariffs.
    • Ability to develop and produce new competitive technologies and products: The memory and storage industry is characterized by rapid technological advancements, and Micron must continue to innovate to remain competitive.
    • Achieving expected returns from capacity expansion projects: Micron's investments in capacity expansion projects are significant, and the company must achieve expected returns on these investments to justify the capital expenditure.
    • Compliance with government incentive programs and associated requirements: Micron is leveraging government incentives, such as the CHIPS Act, to fund its expansion plans, and it must comply with the associated requirements.
    • Availability and quality of materials, supplies, and capital equipment: Micron's operations are dependent on the availability and quality of materials, supplies, and capital equipment, which can be subject to disruptions.
    • Disruptions to manufacturing operations from operational issues or natural disasters: Micron's manufacturing operations are susceptible to disruptions from operational issues, such as equipment failures, or natural disasters.
    • Dependency on key customers and end markets: Micron's revenue is concentrated in a few key customers and end markets, making it vulnerable to changes in demand from these customers.
    • Cybersecurity breaches and product defects: Cybersecurity breaches and product defects can damage Micron's reputation and financial performance.
    • Attraction and retention of highly skilled employees: Micron's success depends on attracting and retaining highly skilled employees, which can be challenging in a competitive labor market.
    • Compliance with environmental, social, and governance regulations: Micron must comply with environmental, social, and governance regulations, which can be costly and complex.
    • Intellectual property protection and litigation risks: Micron faces intellectual property protection and litigation risks, which can be costly and time-consuming.
  • Future Outlook
    • Micron's future outlook is positive, driven by strong revenue growth, improving profitability, and a robust cash flow generation.
    • The company's investments in capacity expansion projects and new technologies are expected to drive future growth.
    • Micron's financial flexibility is expected to remain strong, providing the company with the resources to navigate potential challenges and capitalize on growth opportunities.

Benchmarks (as of 2025-03-13)

• Performance Comparison:

  • Micron Technology, Inc. (MU) has shown mixed performance compared to the Technology Select Sector SPDR Fund (XLK). Year-to-date, MU has significantly outperformed XLK with a 8.65% return compared to XLK's -10.48%. Over the past week, month, and six months, MU has also outperformed XLK. However, over a 3-year period, MU has underperformed XLK, with returns of 39.32% and 50.62%, respectively. This suggests that while MU has shown strong recent performance, its longer-term performance has been less consistent.

• Risk and Return Analysis:

  • The annualized returns show that MU has outperformed XLK over the 1-year and 2-year periods. However, over the 3-year period, MU's annualized return of 11.69% is lower than XLK's 14.63%.
  • MU's annualized volatility has been consistently higher than XLK's, indicating that MU is a riskier investment. For example, in early 2022, MU's volatility was around 63-70%, while XLK's was approximately 33-35%.
  • The maximum drawdown for MU was -49.63% on 2022-09-26, significantly larger than XLK's maximum drawdown of -33.56% on 2022-10-12. This indicates that MU is subject to greater potential losses from peak to trough.

• Risk-Adjusted Performance:

  • The Sharpe ratios for XLK are generally higher than those for MU, indicating that XLK has offered better risk-adjusted returns. For example, in Q4 2024, MU's Sharpe ratio was 0.24, while XLK's was 0.99.
  • MU's beta is consistently higher than XLK's, indicating that MU is more sensitive to market movements. As of Q1 2025, MU's beta is 2.35, while XLK's beta is 1.6. This suggests that MU's price is likely to fluctuate more than the overall technology sector.

• Overall Assessment:

  • Micron Technology, Inc. (MU) is a higher-risk, higher-reward investment compared to the Technology Select Sector SPDR Fund (XLK). While MU has shown strong recent performance and has the potential for higher returns, it also exhibits greater volatility and larger drawdowns. The higher beta indicates that MU is more sensitive to market movements, which can amplify both gains and losses. Investors should carefully consider their risk tolerance and investment horizon when deciding whether to invest in MU versus XLK.

Peers Price History(as of 2025-03-13)

• Performance Comparison:
  • Micron Technology (MU) has shown mixed performance compared to its peer companies. Over the past year, Micron Technology (MU) outperformed Intel Corp. (INTC) significantly, with returns of 4.22% compared to Intel Corp. (INTC)'s -43.98%. However, it underperformed Analog Devices, Inc. (ADI), which had returns of 6.56%. Over a longer two-year period, Micron Technology (MU) significantly outperformed both Intel Corp. (INTC) and Analog Devices, Inc. (ADI), with returns of 76.79% compared to Intel Corp. (INTC)'s -13.31% and Analog Devices, Inc. (ADI)'s 13.16%. More recently, in the last three months, Micron Technology (MU) has underperformed both Intel Corp. (INTC) and Analog Devices, Inc. (ADI).
• Risk and Return Analysis:
  • The annualized returns reflect a similar pattern. Over a one-year period, Micron Technology (MU) had an annualized return of 4.22%, outperforming Intel Corp. (INTC) but underperforming Analog Devices, Inc. (ADI). Over a two-year period, Micron Technology (MU) had a significantly higher annualized return of 32.96% compared to Intel Corp. (INTC)'s -6.89% and Analog Devices, Inc. (ADI)'s 6.38%.
  • Micron Technology (MU) generally exhibited higher annualized volatility compared to Intel Corp. (INTC) and Analog Devices, Inc. (ADI) for most of the periods. For example, in early 2025, Micron Technology (MU) had volatility as high as 81.95%. Intel Corp. (INTC) had volatility ranging up to 85.36%, while Analog Devices, Inc. (ADI) showed lower volatility, ranging up to 47.5%.
  • Micron Technology (MU) experienced a maximum drawdown of -49.63% on 2022-09-26, which is less than Intel Corp. (INTC)'s maximum drawdown of -69.57% on 2024-09-06, but significantly more than Analog Devices, Inc. (ADI)'s maximum drawdown of -26.25% on 2022-10-14. This suggests that Micron Technology (MU) carries a higher risk profile than Analog Devices, Inc. (ADI) but less than Intel Corp. (INTC).
• Risk-Adjusted Performance:
  • Analog Devices, Inc. (ADI) generally exhibited higher Sharpe Ratios compared to Micron Technology (MU) and Intel Corp. (INTC) throughout the analyzed period, indicating better risk-adjusted returns. Intel Corp. (INTC) often had negative Sharpe Ratios, particularly in 2022 and early 2023, suggesting poor risk-adjusted performance.
  • The Beta values for Micron Technology (MU), Intel Corp. (INTC), and Analog Devices, Inc. (ADI) were consistently above 1 throughout the analyzed period, indicating that these stocks are more volatile than the market.
• Overall Assessment:
  • Micron Technology (MU) has demonstrated strong performance over the past two to three years, significantly outperforming Intel Corp. (INTC) and Analog Devices, Inc. (ADI). However, more recent performance has been mixed, with underperformance in the last three months compared to Intel Corp. (INTC) and Analog Devices, Inc. (ADI). Micron Technology (MU) exhibits higher volatility and a larger maximum drawdown compared to Analog Devices, Inc. (ADI), indicating a higher risk profile. The Sharpe Ratio suggests that Analog Devices, Inc. (ADI) has offered better risk-adjusted returns. The Beta values indicate that all three stocks are more volatile than the market.
  • A key trend is the recent underperformance of Micron Technology (MU) compared to its peers, coupled with its higher volatility. This suggests that while Micron Technology (MU) has the potential for high returns, it also carries significant risk.

Peers Fundamentals(as of 2024-11-30)

1. Market Position and Size:

   • Micron Technology (MU) has a market capitalization of $105712.45 million, making it one of the larger companies in its peer group, exceeding both Intel Corp. (INTC) and Analog Devices, Inc. (ADI).
   • While MU's revenue for the most recent quarter is $29094 million, which is less than Intel's $53101 million, its EBITDA of $12264 million is greater than Intel's $6919 million, indicating strong operational efficiency. MU's Net Income of $3882 million is also significantly greater than Intel's -$18756 million.
   • MU holds a strong market position with a market cap exceeding its peers. While its revenue is lower than Intel, its superior EBITDA and Net Income suggest effective operational management.

2. Profitability and Efficiency:

   • Micron Technology's Gross Profit Margin is 30.92%, which is less than Analog Devices' 49.09%. However, it is significantly greater than the industry average of -46.37%.
   • MU's EBITDA Margin is 42.15%, which is less than Analog Devices' 44.01% but significantly greater than Intel's 13.03%. It is also substantially greater than the industry average of -2268.54%.
   • The Net Profit Margin for MU is 13.34%, which is less than Analog Devices' 16.75% but significantly greater than Intel's -35.32%. It also outperforms the industry average of -2169.83%.
   • MU demonstrates strong profitability relative to its peers and the industry, particularly in EBITDA and Net Profit Margins, despite having a slightly lower Gross Profit Margin than its peers.

3. Financial Health and Stability:

   • Micron Technology's Current Ratio is 2.72, which is greater than Intel's 1.33 and Analog Devices' 1.93, but less than the industry average of 4.36.
   • MU's Quick Ratio is 1.75, which is greater than Intel's 0.98 and Analog Devices' 1.43, but less than the industry average of 3.55.
   • The Total Debt to Total Equity Ratio for MU is 30.86, which is less than Intel's 50.84 and the industry average of 62.8, but greater than Analog Devices' 21.58.
   • MU's Debt / EBITDA is 1.12, which is less than Intel's 7.23, Analog Devices' 1.84 and the industry average of 13.64.
   • MU demonstrates strong liquidity and solvency, with a manageable debt level compared to its EBITDA and equity, indicating a stable financial position.

4. Valuation and Market Perception:

   • Micron Technology's Enterprise Value To Sales is 4.02, which is greater than Intel's 2.29, but less than the industry average of 11.49.
   • MU's Enterprise Value To EBITDA is 9.49, which is less than Intel's 17.54 and the industry average of 257.24.
   • The Price To Earnings for MU is 27.4, which is less than Analog Devices' 64.99 and the industry average of 65.47.
   • MU's Price to Book Ratio is 2.26, which is greater than Intel's 1.03, but less than Analog Devices' 2.88 and the industry average of 5.97.
   • MU's Price To Sales Ratio is 3.66, which is greater than Intel's 1.91, but less than Analog Devices' 10.88 and the industry average of 13.6.
   • MU appears undervalued compared to its peers and industry averages, particularly in terms of Enterprise Value To EBITDA and Price To Earnings, suggesting potential for market appreciation.

5. Cash Flow and Capital Management:

   • Micron Technology's Net Operating Cash Flow is $10350 million, which is greater than Intel's $8288 million and Analog Devices' $3840.51 million.
   • MU's Total Capital Expenditure is $9796 million, which is less than Intel's $23944 million but greater than Analog Devices' $656.46 million.
   • The Free Cash Flow for MU is $554 million, which is less than Analog Devices' $3184.04 million but greater than Intel's -$15656 million.
   • MU exhibits strong cash flow generation, with a substantial Net Operating Cash Flow, although its Free Cash Flow is lower than Analog Devices, it is still positive, unlike Intel.

6. Growth and Future Prospect:

   • MU shows consistently higher growth in Sales/Revenue and EBITDA compared to the peer group average in the most recent year.
   • MU's year-over-year growth rates exhibit significant fluctuations, as indicated by the standard deviations.
   • MU's 3-year CAGR is lower than its 5-year CAGR for Sales/Revenue, EBITDA, Net Income, Basic Earnings per Share, Free Cash Flow, Free Cash Flow Margin, and EBIT Margin. This indicates a deceleration in growth over the most recent three years compared to the previous five years.
   • MU's growth rates have been highly volatile over the 5-year period, as indicated by the high standard deviations.
   • MU's most recent year-over-year growth rates are significantly higher than its 5-year CAGRs for Sales/Revenue and EBITDA, indicating an acceleration in growth in these areas. However, Net Income and Basic Earnings per Share show a deceleration trend.
   • MU's growth is concentrated in Sales/Revenue and EBITDA, with other metrics showing slower or negative growth.
   • The negative growth in Net Income and Basic Earnings per Share, despite revenue growth, could be a potential red flag, indicating issues with profitability or cost management.

7. Potential for Investment:

   • From an investment perspective, Micron Technology presents an attractive opportunity due to its strong profitability, efficient returns, and manageable debt.
   • Its lower valuation metrics compared to peers and industry averages suggest potential for market appreciation.
   • While there are areas where MU underperforms, its overall financial health and competitive positioning make it a compelling investment choice within the semiconductor industry.

8. Key Risks and Considerations:

   • MU's Gross Profit Margin of 30.92% is less than Analog Devices' 49.09%.
   • MU's Price to Book Ratio is 2.26, which is less than Analog Devices' 2.88 and the industry average of 5.97, suggesting it may be undervalued by the market.
   • MU's Free Cash Flow Margin of 0.02 is less than Analog Devices' 0.34.
   • The negative growth in Net Income and Basic Earnings per Share, despite revenue growth, could be a potential red flag, indicating issues with profitability or cost management.

9. Overall Assessment:

   • Micron Technology exhibits strong financial health, characterized by robust profitability metrics, efficient returns on assets and equity, and a manageable debt level.
   • While its gross profit margin is slightly lower than some peers, its superior EBITDA and net profit margins, combined with strong cash flow generation, position it favorably within the industry.
   • The company's lower valuation metrics suggest potential for market appreciation, making it an attractive investment opportunity.