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Micron Technology: Time to Buy The Stock After Earnings

July 25, 2014 | About:

Memory chip producer Micron Technology (NASDAQ:MU) released yet a solid quarterly report. The organization saw strong interest for its products - the DRAM and NAND chips - as the personal computer market stabilized in the wake of declining about 10% in 2013. What's more, Micron is set to profit from some more trends in the memory industry.

Strong end-market prospects

Late news from IDC should increase the trust of Micron investors as PC shipments are relied upon to drop just 6% this year, a real change over last year's drop. Besides, Micron remains bullish about the soundness of the general memory market going ahead, as it has observed a consolidated supplier base in DRAM, alongside stabilization in NAND. Also, the industry is in a stage of development, and every supplier has sufficient scale to contend. Likewise, a slowing rate of technology relocation and supply bit development trends that have now stabilized at a level underneath historical normal have made long haul interest for its products.

Then again, applications obliging memory keep developing. Consequently, Micron expects its products to stay in great interest to serve specific end-market needs and drive a more elevated amount of efficiency and effectiveness. Also, the memory chip producer has extended its business into diversified markets like enterprise, systems administration, versatile, auto, and gaming to upgrade its performance.

Item advancement to drive development

Micron is investing aggressively in its test assembly and supply fasten capabilities to support an extending set of customer requirements. Micron is also focused on finishing its 25-nanometer DRAM conversion, and accumulating the 20-nanometer DRAM slope to upgrade its cost position.

The memory chip creator is also focusing on various development drivers that are relied upon to drive its sales, such as the proceeded with execution of its capital effective 16-nanometer planar NAND conversion. It is also making strategic investments in tools and building resources to support the beginning organization and slope of its inventive 3d NAND technology to convey higher quality system level solutions to customers across the world.

Moving into new areas

Micron is also seeing quickened interest for its server DRAM, which registered 30% quarterly development in the second from last quarter, determined by server farm and enterprise development in density per unit memory substance, prompting improved system level performance. Also, the memory chip producer has experienced solid interest for its organizing products, determined by the LTE assemble in China and in other developing markets. Micron also sees enhanced evaluating for systems administration DRAM on the again of a wealthier blend of products.

The organization's graphics segment is also picking up energy, especially its Gddr5 item that saw strong sales in the second from last quarter on the once more of key OEM entrance in both PC and gaming consoles. Also, Micron is driving development on the technology front with the late releases of Ddr4, Ddr5, and Hybrid Memory Cube.

Ddr4 is coordinated to upgrade the performance of server and desktop applications, while Ddr5 is focused at superior gaming Pcs and workstation graphics. In the mean time, Hybrid Memory Cube is implied for elite solutions in systems administration and figuring. Micron has gotten a positive response from the market for these products, and expects them to develop at a solid rate going ahead.

Moreover, the memory chip producer has propelled its first 16-nanometer customer SSD drive, the Mx100. This item is required to boost performance and make esteem in the SSD segment for Micron. Besides, Micron anticipates solid OEM development for its M510 and M550 customer drives, as it has witnessed strong customer interest in terabyte-class customer Ssds for quick work process, cloud, and different applications. Micron has also dispatched the M500 DC SATA enterprise drive for server farm applications, and got an expansive volume responsibility from a significant search organization to address their storage needs.

Also, Micron has done well in its versatile business. It has seen strong interest for its emcp and emmc portable products for Tier 1 Oems, while exploiting the more segmented opportunities in the Tier 2 market in China. Also, the organization has chosen to start volume shipments for these products in the current quarter.

Micron expects that its emcp and emmc portable products will scale significantly to pretty nearly 25% of the general versatile revenue in fiscal year 2015, as contrasted with less than 10% today. The organization has also started sampling low-power Ddr4 to its partners and chipset vendors. It expects to start shipments for this low-power item in the second-a large portion of fiscal 2015.

Awesome fundamentals and development projections

Henceforth, Micron is required to do well on several fronts. Be that as it may what makes the stock significantly additionally luring its shabby valuation and the desire of quick earnings development. Micron right now trades at a forward P/E numerous of 9.19 as contrasted with a trailing P/E various of 12.73, which indicates that the organization's earnings are required to develop going ahead.

Also, its PEG degree of 0.50 indicates undervaluation. Besides, it has considerably strong operating and profit margins of 18.34% and 24.06%, respectively. Its return on value is impressive as well at 38.86%. Additionally, analysts have anticipated a yearly earnings development rate of 19.63% for the following five years, higher than the normal industry CAGR of 15.72%, reflecting better development prospects of Micron. Subsequently, all things considered, Micron looks like a solid wager and there's a solid risk that it will keep acknowledging after earnings.

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