As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Micron Technology, Inc. (NASDAQ:MU), it is a financially-sound company with a great track record of performance, trading at a great value. Below, I’ve touched on some key aspects you should know on a high level. If you’re interested in understanding beyond my broad commentary, take a look at the report on Micron Technology here.
Flawless balance sheet and undervalued
MU has a strong track record of performance. In the previous year, MU delivered an impressive double-digit return of 28%. Unsurprisingly, MU surpassed the Semiconductor industry return of 13%, which gives us more confidence of the company’s capacity to drive earnings going forward. MU’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. MU’s has produced operating cash levels of 3.28x total debt over the past year, which implies that MU’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
MU’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts’ consensus forecast growth be correct. Compared to the rest of the semiconductor industry, MU is also trading below its peers, relative to earnings generated. This supports the theory that MU is potentially underpriced.
For Micron Technology, I’ve compiled three relevant factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for MU’s future growth? Take a look at our free research report of analyst consensus for MU’s outlook.
- Dividend Income vs Capital Gains: Does MU return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from MU as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of MU? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.