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Micron Technology

Nasdaq:MU
Snowflake Description

Reasonable growth potential with mediocre balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
MU
Nasdaq
$24B
Market Cap
Semiconductors
Company description

Micron Technology, Inc. provides semiconductor systems worldwide. More info.


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3 Month History
MU
Industry
5yr Volatility vs Market

Value

 Is Micron Technology undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Micron Technology to its discounted cash flow value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Micron Technology is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Micron Technology's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Micron Technology's earnings available for a low price, and how does this compare to other companies in the same industry?
  • No earnings or negative earnings.
  • No earnings or negative earnings.
Price based on expected Growth
Does Micron Technology's expected growth come at a high price?
  • No earnings or negative earnings.
Price based on value of assets
What value do investors place on Micron Technology's assets?
  • Good value based on assets compared to the Semiconductors industry average.
X
Value checks
We assess Micron Technology's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
  2. Is the PE ratio less than the market average, and/ or less than the Semiconductors industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Semiconductors industry average (and greater than 0)? (1 check)
  5. Micron Technology has a total score of 1/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (813.24%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Free cash flow to Equity)

The calculations below outline how an intrinsic value for Micron Technology is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$4,907

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $1,389 × (1 + 2.5%) ÷ (10.21% – 2.5%)

Terminal value based on the Perpetuity Method where growth (g) = 2.5%:
$18,405

Present value of terminal value:
$11,322

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value

Value = Total value / Shares Outstanding ($16,229 / 1,102)

Value per share:
$14.72

Current discount (share price of $21.96): -49%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 10.21% = 2.47% + (1.027 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

1.027 = 0.803 (1 + (1- 30%) (39.97%))

Levered Beta used in calculation = 1.027



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in United States.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Micron Technology expected to perform in the next 1 to 3 years based on estimates from 24 analysts?

    The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

    Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
    3 year growth
    Earnings are expected to become positive over 3 years.
    Future Earnings growth analysis
    Is Micron Technology expected to grow at an attractive rate? We look at the 1 year and 3 year growth below.

    Are Micron Technology's annual earnings growth expected to exceed 3.6% over the next 3 years?

    • Expected to become positive in 1 year.
    • Expected to become positive over 3 years.
    Past and Future Earnings per Share
    The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
    Analysts growth expectations
    2 year growth check
    Super high growth metrics x1.5?

    Which of the these is expected to increase by over 50% in 2 year's time?

    • Revenue
    • Cash flow
    • Micron Technology is expected to become profitable in 2 years.
    Performance in 3 years
    In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
    • Micron Technology is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

    Improvement & Relative to industry
    • Expected to be less than the Semiconductors industry average.
    • A decline in Micron Technology's performance (ROE) is expected over the next 3 years.
    X
    Future performance checks
    We assess Micron Technology's future performance by looking at:
    1. Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
    2. Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
    3. Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
    4. Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
    5. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
    Some of the above checks will fail if the company is expected to be loss making in the relevant year.
    Micron Technology has a total score of 4/6, see the detailed checks below.

    Note: If no +3 year data is available, +2.5 year data may be used.

    Note 2: We use GAAP per Share in all our calculations.

    Full details on the Future part of the Simply Wall St company analysis model.

    Past Performance

     How has Micron Technology performed over the past 5 years?

    The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
    Past earnings growth
    Below we compare Micron Technology's growth in the last year to its industry (Semiconductors).
    Past Earnings growth analysis
    We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
    • Micron Technology does not currently make a profit.
    Profit History
    Micron Technology's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
    Performance last year
    We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
    • Negative return on shareholders funds (ROE) last year.
    • Micron Technology performed worse than the Semiconductors industry average based on return on assets (ROA) last year.
    • Return based on revenue producing assets (ROCE) is negative or zero.
    X
    Past performance checks
    We assess Micron Technology's performance over the past 5 years by checking for:
    1. Has earnings per share (EPS) increased in past 5 years? (1 check)
    2. Has the EPS growth in the last year exceeded that of the Semiconductors industry? (1 check)
    3. Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
    4. Is the Return on Equity (ROE) higher than 20%? (1 check)
    5. Is the Return on Assets (ROA) above industry average? (1 check)
    6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
    The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
    Micron Technology has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations.

    Full details on the Past part of the Simply Wall St company analysis model.

    Health

     How is Micron Technology's financial health and their level of debt?

    A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

    The boxes below represent the relative size of what makes up Micron Technology's finances.

    The net worth of a company is the difference between its assets and liabilities.
    Net Worth
    • Micron Technology is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
    • Micron Technology's cash and other short term assets cover its long term commitments.
    Balance sheet
    This treemap shows a more detailed breakdown of Micron Technology's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
    Assets
    Liabilities and shares
    The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
    • High level of stock/ inventory/ unsold assets.
    • Total debt is not covered by total short term assets.
    Historical Debt
    Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

    The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

    If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
    • The level of debt (73%) compared to net worth is high (greater 40%).
    • The level of debt compared to net worth has increased over the past 5 years (22% vs 73% today).
    • Total debt is well covered by annual operating cash flow (greater than 20% of total debt).
    • Company is making a loss, therefore interest on debt is not well covered by earnings.
    X
    Financial health checks
    We assess Micron Technology's financial health by checking for:
    1. Are short term assets greater than short term liabilities? (1 check)
    2. Are short term assets greater than long term liabilities? (1 check)
    3. Has the debt to equity ratio increased in the past 5 years? (1 check)
    4. Is the debt to equity ratio over 40%? (1 check)
    5. Is the debt covered by short term assets? (1 check)
    6. Are earnings greater than 5x the interest on debt (if comapany pays interest at all)? (1 check)
    7. Micron Technology has a total score of 3/6, see the detailed checks below.


    Full details on the Health part of the Simply Wall St company analysis model.

    Dividends

     What is Micron Technology's current dividend yield, its reliability and sustainability?

    Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
    Annual Dividend Income
    Dividend payments
    0%
    Current annual income from Micron Technology dividends.
    If you bought $2,000 of Micron Technology shares you are expected to receive $0 in your first year as a dividend.
    Dividend Amount
    Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
    • Paying below low risk savings rate. (1.75%)
    • Paying below the markets top dividend payers. (3.18%)
    Historical dividend yield
    It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

    We also check to see if the dividend has increased in the past 10 years.
    • Not paying a notable dividend.
    • Not paying a notable dividend.
    Current Payout to shareholders
    What portion of Micron Technology's earnings are paid to the shareholders as a dividend.
    • Not paying a notable dividend.
    Future Payout to shareholders
    • Insufficient estimate data to determine if a dividend will be paid in 3 years.
    X
    Income/ dividend checks
    We assess Micron Technology's dividend by checking for:
    1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
    2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
    3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
    4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
    5. How sustainable is the dividend, can Micron Technology afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
    6. Micron Technology has a total score of 0/6, see the detailed checks below.


    Full details on the Dividends part of the Simply Wall St company analysis model.

    Management

     What is the CEO of Micron Technology's salary, the management and board of directors tenure and is there insider trading?

    Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
    CEO
    D. Durcan, image provided by Google.
    D. Durcan
    COMPENSATION$5,601,837
    AGE56
    CEO Bio

    Mr. D. Mark Durcan has been the Chief Executive Officer at Micron Technology, Inc. since February 2012. Mr. Durcan is a 30-year veteran of Micron and served in various senior leadership roles at Micron. He served as the President of Micron Technology Inc. since June 2007 until February 2012 and served as its Chief Operating Officer since February 2006 until February 2012; Chief Technical Officer and Vice President of Research and Development since June 1997 until February 2006; & Vice President of Process Research and Development since June 1996 until June 1997. Mr. Durcan joined Micron Technology Inc., in June 1984 as a Diffusion Engineer and held a series of increasingly responsible positions including Process Integration Engineer, Process Integration Manager and Process Development Manager. He serves as the Chairman of Micron Technology Foundation, Inc. He served as Vice Chairman of Inotera Memories Inc. He has been an Independent Director of AmerisourceBergen Corporation since September 8, 2015. Mr. Durcan has been a Director of Micron Technology Inc. since February 2012, Freescale Semiconductor, Inc. and Freescale Semiconductor, Ltd. since August 13, 2014. He has been a Member of Advisory Board of Clear Metals Inc. since April 19, 2013. He serves as a Board Member of the Semiconductor Industry Association Board and the Tech CEO Council. He served as a Director of Inotera Memories Inc. He served as a Director of MWI Veterinary Supply, Inc. from March 10, 2014 to February 2015. He graduated from Rice University in 1984 with a Bachelor of Science degree in Chemical Engineering. Mr. Durcan holds an MChE in Chemical Engineering from Rice University.

    CEO Compensation
    • CEO's compensation has been consistent with company performance over the past year.
    • CEO's compensation appears reasonable.
    Management Team Tenure

    Average tenure of the Micron Technology management team:

    Management tenure
    3.3 years
    • The tenure for the Micron Technology management team is about average.
    Management Team

    D. Durcan

    TITLE
    Chief Executive Officer and Director
    COMPENSATION
    $5,601,837
    AGE
    56

    Ernie Maddock

    TITLE
    Chief Financial Officer and Vice President of Finance
    COMPENSATION
    $3,245,516
    AGE
    59

    Steve Thorsen

    TITLE
    Vice President of Worldwide Sales
    COMPENSATION
    $2,248,981
    AGE
    52

    Brian Shirley

    TITLE
    Vice President of Memory Technology and Solutions
    COMPENSATION
    $3,897,261
    AGE
    48

    Scott DeBoer

    TITLE
    Vice President of Technology Development
    COMPENSATION
    $2,248,231
    AGE
    51

    Trevor Schultz

    TITLE
    Chief Information Officer and Vice President of Information Systems
    AGE
    75
    Board of Directors Tenure

    Average tenure of the Micron Technology board of directors:

    Board tenure
    8.6 years
    • The tenure for the Micron Technology board of directors is about average.
    Board of Directors

    Bob Switz

    TITLE
    Chairman of the Board
    COMPENSATION
    $500,011
    AGE
    71

    D. Durcan

    TITLE
    Chief Executive Officer and Director
    COMPENSATION
    $5,601,837
    AGE
    56

    Larry Mondry

    TITLE
    Independent Director
    COMPENSATION
    $385,011
    AGE
    57

    Mercedes Johnson

    TITLE
    Independent Director
    COMPENSATION
    $393,196
    AGE
    63

    Bob Bailey

    TITLE
    Independent Director
    COMPENSATION
    $350,011
    AGE
    60

    Pat Byrne

    TITLE
    Independent Director
    COMPENSATION
    $350,011
    AGE
    57
    Recent Insider Trading
    • Micron Technology insiders have sold more shares than they have bought in the past 3 months.
    Who owns this company?
    X
    Management checks
    We assess Micron Technology's management by checking for:
    1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
    2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
    3. Is the average tenure of the management team less than 2 years? (1 check)
    4. Is the average tenure of the board of directors team less than 3 years? (1 check)
    5. Micron Technology has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.


    Note: We use the top 6 management executives and board members in our calculations.

    Note 2: Insider trading include any internal stakeholders and these transactions.

    Full details on the Management part of the Simply Wall St company analysis model.

    Company News

    Articles
    Announcements

    Company Info

    Description

    Micron Technology, Inc. provides semiconductor systems worldwide. The company operates through four segments: Compute and Networking Business Unit, Storage Business Unit, Mobile Business Unit, and Embedded Business Unit. It offers DDR3 and DDR4 DRAM products for computers, servers, networking devices, communications equipment, consumer electronics, automotive, and industrial applications; mobile low-power DRAM products for smartphones, tablets, automotive, laptop computers, and other mobile consumer device applications; DDR2 and DDR DRAM, GDDR5 and GDDR5X DRAM, SDRAM, and RLDRAM products for networking devices, servers, consumer electronics, communications equipment, computer peripherals, automotive and industrial applications, and computer memory upgrades; and hybrid memory cube semiconductor memory devices for use in networking and computing applications. The company also provides NAND Flash products, which are electrically re-writeable, non-volatile semiconductor memory devices; client solid-state drives (SSDs) for notebooks, desktops, workstations, and other consumer applications; enterprise SSDs for server and storage applications; managed multi-chip package products; digital media products, including flash memory cards and JumpDrive products under the Lexar brand name. In addition, it manufactures products that are sold under other brand names; and resells flash memory products that are purchased from other NAND Flash suppliers. Further, the company provides 3D XPoint memory products; and NOR Flash, which are electrically re-writeable and semiconductor memory devices for automotive, industrial, connected home, and consumer applications. It markets its products to original equipment manufacturers and retailers through its internal sales force, independent sales representatives, and distributors; and through a Web-based customer direct sales channel, and channel and distribution partners. The company was founded in 1978 and is headquartered in Boise, Idaho.

    Details
    Name:Micron Technology, Inc.
    Ticker:MU
    Exchange:NasdaqGS
    Founded:1978
    Market Cap:$24,210 million
    Website:http://www.micron.com
    Listings
    Map

    8000 South Federal Way, Boise, 83716, United States

    Number of employees
    Street

    Current staff
    Staff numbers
    31,400
    Micron Technology employees.
    Industry
    Industry:Semiconductors
    Sector:Semiconductors and Semiconductor Equipment