Micron Technology stock has outperformed the S&P despite flat sales since 2018 — here’s why

Micron Technology (NASDAQ:MU) The stock price has increased nearly 1.8x from $32 at the end of 2018 to $56 currently, mainly due to favorable changes in the P/S multiple. That’s surprising given that the company has only seen a 1.2% increase in revenue and a 3.9% decline in outstanding shares over the period. Even so, thanks to rising investor expectations, the stock has managed to outperform the S&P, which returned around 55% over the same period.

In our interactive dashboard Why Micron Technology stock has moved: MU stock is up 76% since 2018let’s break down the factors behind this step.

MU’s total revenue is up just 1.2% from $30.4 billion in 2018 to about $30.8 billion on an LTM basis

  • MU’s total revenue first fell to $21.4 billion in fiscal 20 from $30.4 billion in fiscal 2018 (MU’s fiscal year ends in August) as the semiconductor supply glut first impacted demand, followed by of the pandemic, which led to disruptions in the supply chain.
  • Revenue then increased to $27.7 billion in FY ’21 and is currently even higher at $30.8 billion since last FY ’22 (MU’s fiscal year ends in August).
  • Compared to FY ’18, however, FY ’22 sales are only slightly higher.
  • DRAM semiconductor sales make up the bulk of Micron’s revenue, with $22.4 billion of the company’s DRAM semiconductor sales (FY ’22) accounting for about 73% of total revenue.
  • For more details on MU earnings and how it compares to competitors, visit Micron Technology Sales Comparison

Sales per share are up 5.3% from $26.38 in 2018 to around $28.00 currently

  • MU’s revenue grew to $30.8 billion today from $30.4 billion in 2018, while its outstanding share count fell 4% over the period to about 1.1 billion currently.
  • Because of this, RPS is up about 5.3% from $26.38 in FY ’18 to $28.24 currently.

The price-to-sales (P/S) multiple for Micron increased from 1.2x at the end of 2018 to 3.9x at the end of 2020, but is currently down to around 2x, still nearly 1.7x higher than 2018 levels

  • Despite Micron’s subdued performance between 2018 and 2020, its P/S multiple rose sharply from 1.2x at the end of 2018 to as high as 3.9x at the end of 2020 on rising investor expectations.
  • However, due to rising economic uncertainty weighing on broader markets and concerns about continued supply chain headwinds, the P/S multiple has declined and currently stands at around 2x, which is still nearly 70% above 2018 levels .
  • For more details on the company’s stock returns and how it compares to its peers, visit Micron Technology stock return comparison.

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