How Has Micron Technology Inc's (NASDAQ:MU) Performed Against The Industry?

Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Micron Technology Inc's (NASDAQ:MU) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.

See our latest analysis for Micron Technology

How Well Did MU Perform?

MU's trailing twelve-month earnings (from 31 May 2018) of US$12.18b has more than doubled from -US$276.00m in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 40.47%, indicating the rate at which MU is growing has accelerated. What's the driver of this growth? Let's take a look at if it is solely owing to an industry uplift, or if Micron Technology has experienced some company-specific growth.

Over the last few years, Micron Technology expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 19.65% over the prior year, and 19.49% over the past five years. This growth is a median of profitable companies of 25 Semiconductor companies in US including Hanwha Q CELLS, Integrated Device Technology and Ambarella. This means that any tailwind the industry is enjoying, Micron Technology is capable of amplifying this to its advantage.

In terms of returns from investment, Micron Technology has invested its equity funds well leading to a 41.27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 29.91% exceeds the US Semiconductor industry of 8.33%, indicating Micron Technology has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Micron Technology’s debt level, has increased over the past 3 years from 18.29% to 35.66%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 45.57% to 24.90% over the past 5 years.

What does this mean?

Though Micron Technology's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Micron Technology to get a more holistic view of the stock by looking at:

1. 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.
2. Financial Health: Are MU’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 May 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.