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Wall Street JournalEvaluating Micron Technology Against Peers In Semiconductors & Semiconductor Equipment Industry
In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Micron Technology (NASDAQ:MU) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within the industry.
Micron Technology Background
Micron is one of the largest semiconductor companies in the world, specializing in memory and storage chips. Its primary revenue stream comes from dynamic random access memory, or DRAM, and it also has minority exposure to not-and or NAND, flash chips. Micron serves a global customer base, selling chips into data centers, mobile phones, consumer electronics, and industrial and automotive applications. The firm is vertically integrated.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Micron Technology Inc | 27.98 | 5.63 | 7.85 | 9.28% | $8.35 | $7.65 | 56.65% |
| NVIDIA Corp | 46.59 | 38.48 | 24.72 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 73.25 | 20.38 | 26.54 | 11.02% | $9.86 | $12.25 | 28.18% |
| Taiwan Semiconductor Manufacturing Co Ltd | 31.37 | 9.87 | 13.58 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 112.88 | 5.77 | 10.99 | 2.06% | $2.11 | $4.78 | 35.59% |
| Qualcomm Inc | 34.62 | 8.76 | 4.33 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 611.33 | 1.64 | 3.02 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32 | 9.60 | 9.31 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 60.45 | 3.99 | 12.42 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 141.68 | 15.83 | 26.70 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 30.20 | 5.17 | 9.56 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.25 | 5.52 | 4.66 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.86 | 12.49 | 16.83 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 32.66 | 3.48 | 1.77 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.59 | 3.19 | 5.71 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 124.74 | 20.32 | 34.71 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 44.86 | 1.29 | 2.05 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 74 | 2.75 | 3.65 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.90 | 1.76 | 2.64 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 70.01 | 4.77 | 9.07 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 372.80 | 14.44 | 20.82 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 44.56 | 7.82 | 15 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 96.41 | 9.4 | 12.29 | 5.41% | $39.29 | $34.15 | 32.03% |
After thoroughly examining Micron Technology, the following trends can be inferred:
With a Price to Earnings ratio of 27.98, which is 0.29x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
The current Price to Book ratio of 5.63, which is 0.6x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
The Price to Sales ratio is 7.85, which is 0.64x the industry average. This suggests a possible undervaluation based on sales performance.
The company has a higher Return on Equity (ROE) of 9.28%, which is 3.87% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $8.35 Billion is 0.21x below the industry average, suggesting potential lower profitability or financial challenges.
The company has lower gross profit of $7.65 Billion, which indicates 0.22x below the industry average. This potentially indicates lower revenue after accounting for production costs.
With a revenue growth of 56.65%, which surpasses the industry average of 32.03%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When examining Micron Technology in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
When comparing the debt-to-equity ratio, Micron Technology is in a stronger financial position compared to its top 4 peers.
The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.21.
Key Takeaways
For Micron Technology in the Semiconductors & Semiconductor Equipment industry, the PE, PB, and PS ratios are all low compared to peers, indicating potential undervaluation. On the other hand, the high ROE and revenue growth suggest strong performance and future prospects relative to industry competitors. However, the low EBITDA and gross profit may raise concerns about operational efficiency and profitability compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.