3 Big Reasons to Love Micron (MU)

Micron has been on fire lately. In the past six months alone, the company’s stock price has rocketed 176%, reaching $385.90 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is now still a good time to buy MU? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.

Why Are We Positive On MU?

Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE:MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Micron’s 13.9% annualized revenue growth over the last five years was impressive. Its growth beat the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

2. Projected Revenue Growth Is Remarkable

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.

Over the next 12 months, sell-side analysts expect Micron’s revenue to rise by 116%, an improvement versus its 13.9% annualized growth for the past five years. This projection is eye-popping for a company of its scale and indicates its newer products and services will catalyze better top-line performance.

3. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Micron’s EPS grew at 29.2% compounded annual growth rate over the last five years, higher than its 13.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Final Judgment

These are just a few reasons Micron is a high-quality business worth owning, and after the recent surge, the stock trades at 8.8× forward P/E (or $385.90 per share). Is now a good time to buy despite the apparent froth? See for yourself in our in-depth research report, it’s free.

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