Micron Technology (MU:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Micron Technology(MU:NAS)

Technology:Semiconductor Memory

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$34.66 (USD) 29/10/2018

Weighted Valuation
$68.23 (USD)

Overall Rating
Undervalued by 96.9%

Valuation Models Analyst Consensus: $74.67 (USD)
(in order of importance) Comparables: $64.91 (USD)
Adjusted Book Value: $55.56 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (MU:NAS USD)

Price 34.66
Range 33.82 – 36.20
52 week 34.66 – 62.62
Open 36.14
Vol / Avg. 33.38M/34.72M
Mkt cap 39.31B
P/E 3.01
Div/yield 0.00/0.00
EPS 11.51
Shares 1.13B
Beta 1.53

Company Description

Micron Technology has historically focused on providing DRAM for PCs and servers. The firm has expanded into the NAND flash memory market over the past decade. It has also increased its DRAM scale with the purchase of Elpida (completed in mid-2013) and Inotera (completed in December 2016).

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for MU:NAS

Using a discounted cash flow model we generated an intrinsic value of $151.63 (USD) for MU:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

MU:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $151.63 1% 5% 1% 5%
WACC (or Ke) 12.46 $171.34 $135.70
Terminal Growth Rate 3.00 $137.87 $168.64
Tax Rate 0.01 $161.34 $142.43
Cash Flow 25,599,929,000 $141.16 $162.09
Capital Expenditures -5,221,800,000 $149.93 $153.32
Long Term Debt 9,910,000,000 $152.06 $151.19

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $64.91 (USD) for MU:NAS. We also generated a valuation of $55.42 (USD) using other metrics and comparables.
The comparable companies were KLA-Tencor (KLAC:NAS), Lam Research (LRCX:NAS), Microchip Technology (MCHP:NAS), Maxim Integrated Products (MXIM:NAS) and Skyworks Solutions (SWKS:NAS).

Company MU:NAS End Date Value
Earnings/Share $11.51 (USD)
Book Value/Share $24.68 (USD)
Sales/Share $22.98 (USD)
Cash Flow/Share $12.64 (USD)
EBITDA/Share $15.79 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) -76.4
$143.17 (USD) -43.2
$101.07 (USD) -50.5
$169.82 (USD) -59.1
$0.00 (USD) -3.7
4.53 PE Ratio 50.41 19.94 11.52 167.89 34.38 18.33
1.83 PB Ratio 5.80 9.72 3.58 3.63 8.11 3.98
1.97 PS Ratio 4.40 3.97 2.48 4.70 6.50 4.36
3.58 PCF Ratio 13.74 13.02 10.33 14.40 19.66 11.27
3.06 EV to EBITDA 11.63 9.25 5.82 19.71 14.24 9.14


Using a multiples approach we generated a valuation of  $68.12 (USD) for MU:NAS

Company MU:NAS End Date Value
Earnings/Share $11.51 (USD)
Book Value/Share $24.68 (USD)
Sales/Share $22.98 (USD)
Cash Flow/Share $12.64 (USD)
EBITDA/Share $15.79 (USD)
Price Based on Comps Adjustment Factor
$97.34 (USD) 0
$50.99 (USD) 0
$44.36 (USD) 0
$67.94 (USD) 0
$79.95 (USD) 0
Ratios Ratio Average
PE Ratio 8.46
PB Ratio 2.07
PS Ratio 1.93
PCF Ratio 5.38
EV to EBITDA 5.06

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  MU:NAS for the last 10 years was  2.00

We ran the Adjusted Book Value for  MU:NAS and generated a book value of  $27.82 (USD)
By multiplying these we get an adjusted valuation of  $55.56 (USD)

Analyst Data

In the Stockcalc database there are 9 analysts that provide a valuation for MU:NAS. The 9 analysts have a concensus valuation for MU:NAS for 2019 of $74.67 (USD).

MU:NAS Micron Technology

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
8 4 0 4.3333 Outperform 2018-10-26

Current Price: 34.66 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 11.06 10.01 14.60
# EPS Analysts 8 7 1
Mean Revenue 31,064.30 30,670.50 37,361.00
# Revenue Analysts 6 6 1
Mean Target Price 74.67
Mean Cash Flow 15.41 14.81 22.18
Mean EBITDA 19,770.10 18,923.50 24,854.30
Mean Net Income 12,976.50 11,463.50 15,953.80
Mean Debt Outstanding -9,129.60 -18,262.80
Mean Tax Rate 12.67 13.00
Mean Growth Rate -14.16
Mean Capital Expenditure 10,265.40 10,362.30 11,670.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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