Market Cap : 71.75 B | Enterprise Value : 66.11 B | PE Ratio : 7.43 | PB Ratio : 1.47 |
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As of today (2022-08-12), Micron Technology's intrinsic value calculated from the Discounted Earnings model is $118.85.
Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.
Micron Technology's Predictability Rank is 4.5-Stars.
Margin of Safety (Earnings Based) using Discounted Earnings model for Micron Technology is 45.28%.
The historical rank and industry rank for Micron Technology's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:
During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Micron Technology was 6.46. The lowest was 0.25. And the median was 0.97.
MU's Price-to-DCF (Earnings Based) is ranked better thanThe historical data trend for Micron Technology's Intrinsic Value: DCF (Earnings Based) can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.
Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.
GuruFocus DCF calculator is a two-stage model. The default values are defined as:
1. Discount Rate: d = 9%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.
2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average earnings growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. =>
For companies with Average Earnings Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%
3. Years of Growth Stage: y1 = 10
4. Terminal Growth Rate: g2 = 4%
5. Years of Terminal Growth: y2 = 10
6. EPS without NRI: eps without nri = $8.770.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, the Earnings Per Share without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.
All of the default settings can be changed and the results are calculated automatically.
Micron Technology's Intrinsic Value: DCF (Earnings Based) for today is calculated as:
Intrinsic Value: DCF (Earnings Based) | = | Earnings per Share (Diluted) | * | {[(1+g1)/(1+d) | + | (1+g1)^2/(1+d)^2 | + | ... | + | (1+g1)^10/(1+d)^10] |
+ | (1+g1)^10/(1+d)^10 | * | [(1+g2)/(1+d) | + | (1+g2)^2/(1+d)^2 | + | ... | + | (1+g2)^10/(1+d)^10]} |
set x = (1+g1)/(1+d) = (1+0.05)/(1+0.09) = 0.96330275229358
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.09) = 0.95412844036697
Intrinsic Value: DCF (Earnings Based) | = | Earnings per Share (Diluted) | * | {[x | + | x^2 | + | ... | + | x^10] | + | x^10 | * | [y | + | y^2 | + | ... | + | y^10]} |
= | Earnings per Share (Diluted) | * | [x | * | (1-x^10) | / | (1-x) | + | x^10 | * | y | * | (1-y^10) | / | (1-y)] | |||||
= | 8.770 | * | 13.5514 | |||||||||||||||||
= | 118.85 |
Margin of Safety % (DCF Earnings Based) | = | (Intrinsic Value: DCF (Earnings Based) | - | Current Price) | / | Intrinsic Value: DCF (Earnings Based) |
= | (118.85 | - | 65.04) | / | 118.85 | |
= | 45.28 % |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.
What you need to know about Discounted Earnings model:
1. The Discounted Earnings model evaluates a company based on its future earnings powerYou can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.
Thank you for viewing the detailed overview of Micron Technology's Intrinsic Value: DCF (Earnings Based) provided by GuruFocus.com. Please click on the following links to see related term pages.
Murphy Mark J. | officer: EVP & Chief Financial Officer | DELPHI AUTOMOTIVE PLC 5725 DELPHI DRIVE TROY MI 48098 |
Beard Robert P | officer: SVP, General Counsel&Secretary | 8000 S. FEDERAL WAY BOISE ID 83716 |
Haynesworth Linnie M | director | 214 N TRYON STREET CHARLOTTE NC 28202 |
Allen Scott R. | officer: CVP, Chief Accounting Officer | 11690 N.W. 105TH STREET MIAMI FL 33178 |
Dugle Lynn A | director | 4803 STONECROFT BOULEVARD CHANTILLY VA 20151 |
Marosvari Paul | officer: VP, Chief Accounting Officer | 8000 S. FEDERAL WAY BOISE ID 83716 |
Wright Mary Ann | director | 250 STEPHENSON HIGHWAY TROY MI 48083 |
Gomo Steven J | director | 495 E. JAVA DRIVE SUNNYVALE CA 94089 |
Mccarthy Mary Pat | director | 2704 WEST 112TH STREET LEAWOOD KS 66211 |
Bokan Michael W | officer: SVP, WORLDWIDE SALES | 8000 S FEDERAL WAY MS 1-557 BOISE ID 83716 |
Zinsner David | officer: SVP & Chief Financial Officer | 1001 MURPHY RANCH ROAD MILPITAS CA 95035 |
Bhatia Manish H | officer: EVP, Global Operations | C/O WESTERN DIGITAL CORPORATION 5601 GREAT OAKS PARKWAY SAN JOSE CA 95119 |
Sadana Sumit | officer: EVP & Chief Business Officer | 47544 AVALON HEIGHTS TERRACE FREMONT CA 94539 |
Mehrotra Sanjay | officer: President & CEO | C/O WESTERN DIGITAL CORPORATION 3355 MICHELSON DRIVE, SUITE 100 IRVINE CA 92612 |
Maddock Ernest E | officer: CFO & VP, Finance | LAM RESEARCH 4650 CUSHING PARKWAY FREMONT CA 94538 |
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