Micron Stock Has Stalled, But One Catalyst Could Bring the Momentum Back
Micron (NASDAQ: MU ) stock has stalled this month as demand across the memory industry cools. It has broken below the crucial support level of $1,000 and is down over 22% from its high for the year. Still, its upcoming earnings report could be the catalyst it needs to reverse course. Micron Earnings May Be the Catalyst It Needs Micron Technology stock has slipped into a bear market after falling by 22% from its highest level this year. This retreat has mirrored that of other top companies in the memory industry like Samsung Electronics, SK Hynix, SanDisk (NASDAQ: SNDK ), Kioxia, and Western Digital (NASDAQ: WDC ). The Roundhill Memory ETF has slumped by 27% from its peak. Micron has a potential catalyst that may lead to a rebound in the coming weeks. It will publish its fiscal fourth-quarter earnings report on September 30th. These results are expected to show that its revenue growth continued to accelerate in the quarter. In its last earnings report, the management said that its revenue would come in at $51 billion, representing a 350% increase from the same period last year. Micron tends to be highly conservative, meaning that its real result will likely be higher than expected.
Micron (NASDAQ: MU ) stock has stalled this month as demand across the memory industry cools. It has broken below the crucial support level of $1,000 and is down over 22% from its high for the year. Still, its upcoming earnings report could be the catalyst it needs to reverse course. Micron Earnings May Be the Catalyst It Needs Micron Technology stock has slipped into a bear market after falling by 22% from its highest level this year.
This retreat has mirrored that of other top companies in the memory industry like Samsung Electronics, SK Hynix, SanDisk (NASDAQ: SNDK ), Kioxia, and Western Digital (NASDAQ: WDC ). The Roundhill Memory ETF has slumped by 27% from its peak. Micron has a potential catalyst that may lead to a rebound in the coming weeks. It will publish its fiscal fourth-quarter earnings report on September 30th.
These results are expected to show that its revenue growth continued to accelerate in the quarter. In its last earnings report, the management said that its revenue would come in at $51 billion, representing a 350% increase from the same period last year. Micron tends to be highly conservative, meaning that its real result will likely be higher than expected. Read Also: Blue Owl, KKR, Blackstone, Apollo Global Stocks Retreat as Private Credit Risks Remain The company also guided to its gross margin to soar to 84%, helped by rising memory prices amid resilient demand.
If this is correct, it will be one of the most profitable companies in the US. There are no signs that its business slowed down in the quarter. For one, its biggest clients like Nvidia (NASDAQ: NVDA ), AMD (NASDAQ: AMD ), Microsoft (NASDAQ: MSFT ), and Meta Platforms (NASDAQ: META ) released strong results and committed to keep spending. It has also embraced long-term contracts with its top clients.
Therefore, the company will likely release a strong earnings report and boost its guidance. The current projection for the next financial year is that its revenue will jump by 88% to $244 billion. Its earnings-per-share (EPS) is also expected to increase from $73 this year to $156. Micron is a Bargain Based on Key Multiples These results come at a time when Micron’s stock has become a bargain based on key multiples.
Its forward price-to-earnings ratio has moved to 13, much lower than the five-year average of 74. This multiple is also lower than the S&P 500 Index’s average of 19. The company is also cheap when using the Rule-of-40 metric. By adding its revenue growth and its profit margin, it has a multiple of 426%, much higher than the key level of 40.
This cheap multiple means that the company will ramp up its share repurchase program, possibly in December. Its repurchases have been limited by its participation in the CHIPS Act, which limited the amount that the company can buy for two years. As such, it may announce a big repurchase when the restrictions end. Read Also: Top Three Undervalued S&P 500 Stocks the Market Rally Left Behind Image: Shutterstock