Micron Technology, Inc. (MU) gets our Neutral rating. Click here for details in our free report on MU.
Micron’s stock has done very well recently (up 28% in the last 3 months) and we think the valuation is full. The company’s quality of earnings and profit growth look good, but the current stock price fully reflects that. We think investors should pay more attention to SanDisk Corporation, which is our Stock Pick of the Week and gets our Very Attractive Rating. Compared to MU, SNDK has been largely overlooked, down 10% in the last 3 months, even though the company has higher returns on invested capital (ROIC) and a much cheaper valuation.
One of the issues weighing down the investment merit of MU is the amount of write-downs management has taken over the past 13 years. Specifically, and as detailed in our report, MU’s management has written down over $3bn in assets, that equals 25% of the company’s current reported net assets. In other words, MU’s management has written down 25 cents of every dollar that investors have trusted them with. As detailed in our report “Hidden Management Failures: Asset Write-Downs“:
- Given that managers are paid to create value, not destroy it, asset write-downs reflect management incompetence and failure to allocate capital effectively.
- Investors must beware companies that report artificially high profits due to the asset-write-down loophole.
Bottom line: we recommend you invest in SNDK, not MU.
Check out New Constructs’ stock-picking accolades. Barrons has consistently ranked our Most Attractive Stocks as #1 or #2 amongst the model portfolios of the top Wall Street firms.
3 replies to "For Ask Matt Readers: Micron Technology, Inc. (MU) – Neutral Rating"
[…] Step 2: Measure a stock’s ignored income flow. Some investors confirm if a batch is pricey by comparing a stream cost to a benefaction value of a approaching income flows. It’s a difficult research done elementary with a complement from NewConstructs. When we run Micron’s stock, we find it’s rated “neutral.” In other words, a stream batch cost is in line with a value of what a association is approaching to beget in income over a lifetime. NewConstructs charges for a reports, nonetheless a free Micron news is accessible to Ask Matt readers. […]
[…] Step 2: Measure the stock’s discounted cash flow. Some investors decide if a stock is pricey by comparing its current price to the present value of its expected cash flows. It’s a complicated analysis made simple with a system from NewConstructs. When we run Micron’s stock, we find it’s rated “neutral.” In other words, the current stock price is in line with the value of what the company is expected to generate in cash over its lifetime. NewConstructs charges for its reports, but a free Micron report is available to Ask Matt readers. […]
[…] Step 2: Measure the stock’s discounted cash flow. Some investors decide if a stock is pricey by comparing its current price to the present value of its expected cash flows. It’s a complicated analysis made simple with a system from NewConstructs. When we run Micron’s stock, we find it’s rated “neutral.” In other words, the current stock price is in line with the value of what the company is expected to generate in cash over its lifetime. NewConstructs charges for its reports, but a free Micron report is available to Ask Matt readers. […]