Let's talk about the popular Micron Technology, Inc. (NASDAQ:MU). The company's shares saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$75.37 and falling to the lows of US$53.65. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Micron Technology's current trading price of US$57.31 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Micron Technology’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Micron Technology Worth?
Micron Technology appears to be overvalued by 23% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$57.31 on the market compared to my intrinsic value of $46.68. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Micron Technology’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Micron Technology look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 3.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Micron Technology, at least in the short term.
What This Means For You
Are you a shareholder? MU’s future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe MU should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on MU for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Diving deeper into the forecasts for Micron Technology mentioned earlier will help you understand how analysts view the stock going forward. Luckily, you can check out what analysts are forecasting by clicking here.
If you are no longer interested in Micron Technology, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Valuation is complex, but we're helping make it simple.
Find out whether Micron Technology is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.