Micron Technology Inc Valuation – February 2017 $MU

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Micron Technology Inc (MU) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Micron Technology, Inc. is engaged in semiconductor systems. The Company’s portfolio of memory technologies, including dynamic random-access memory (DRAM), negative-AND (NAND) Flash and NOR Flash are the basis for solid-state drives, modules, multi-chip packages and other system solutions. Its business segments include Compute and Networking Business Unit (CNBU), which includes memory products sold into compute, networking, graphics and cloud server markets; Mobile Business Unit (MBU), which includes memory products sold into smartphone, tablet and other mobile-device markets; Storage Business Unit (SBU), which includes memory products sold into enterprise, client, cloud and removable storage markets, and SBU also includes products sold to Intel through its Intel/Micron Flash Technology (IMFT) joint venture, and Embedded Business Unit (EBU), which includes memory products sold into automotive, industrial, connected home and consumer electronics markets.

MU Chart

MU data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[otw_shortcode_button href=”https://www.moderngraham.com/moderngraham-stocks-screens/” size=”medium” icon_position=”left” shape=”square”]Learn More About Premium Membership[/otw_shortcode_button]


Downloadable PDF version of this valuation:

ModernGraham Valuation of MU – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $25,162,492,232 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.71 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -265.38% Fail
6. Moderate PEmg Ratio PEmg < 20 15.03 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.04 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.71 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.91 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.54
MG Growth Estimate 15.00%
MG Value $59.14
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $22.27
MG Value based on 0% Growth $13.06
Market Implied Growth Rate 3.26%
Current Price $23.08
% of Intrinsic Value 39.03%

Micron Technology, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.22 in 2013 to an estimated $1.54 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Micron Technology, Inc. revealed the company was trading below its Graham Number of $23.61. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 15.03, which was below the industry average of 28.12, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.51.

Micron Technology, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.51
Graham Number $23.61
PEmg 15.03
Current Ratio 1.71
PB Ratio 2.04
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 11/1/2016
Total Current Assets $9,504,000,000
Total Current Liabilities $5,546,000,000
Long-Term Debt $7,565,000,000
Total Assets $27,836,000,000
Intangible Assets $445,000,000
Total Liabilities $15,516,000,000
Shares Outstanding (Diluted Average) 1,091,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.10
Aug2016 -$0.27
Aug2015 $2.47
Aug2014 $2.54
Aug2013 $1.13
Aug2012 -$1.04
Aug2011 $0.17
Aug2010 $1.85
Aug2009 -$2.35
Aug2008 -$2.10
Aug2007 -$0.42
Aug2006 $0.57
Aug2005 $0.29
Aug2004 $0.24
Aug2003 -$2.11
Aug2002 -$1.51
Aug2001 -$1.05
Aug2000 $2.56
Aug1999 -$0.13
Aug1998 -$0.58
Aug1997 $0.72

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.54
Aug2016 $1.16
Aug2015 $1.60
Aug2014 $1.09
Aug2013 $0.22
Aug2012 -$0.38
Aug2011 -$0.23
Aug2010 -$0.45
Aug2009 -$1.33
Aug2008 -$0.64
Aug2007 -$0.04
Aug2006 -$0.07
Aug2005 -$0.53
Aug2004 -$0.75
Aug2003 -$0.98
Aug2002 -$0.33
Aug2001 $0.28

Recommended Reading:

Other ModernGraham posts about the company

Micron Technology Inc. Valuation – November 2015 Update $MU
30 Companies in the Spotlight This Week – 11/15/14
Micron Technology Inc. Annual Valuation – 2014 $MU

Other ModernGraham posts about related companies

Amphenol Corp Valuation – February 2017 $APH
Kopin Corporation Valuation – Initial Coverage $KOPN
Xilinx Inc Valuation – February 2017 $XLNX
Western Digital Corporation Valuation – February 2017 $WDC
Texas Instruments Inc Valuation – February 2017 $TXN
Knowles Corp Valuation – Initial Coverage $KN
Cree Inc Valuation – Initial Coverage $CREE
Cray Inc Valuation – Initial Coverage $CRAY
Kulicke and Soffa Industries Inc Valuation – Initial Coverage $KLIC
Keysight Technologies Inc Valuation – Initial Coverage $KEYS


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.