Why Has Micron Technology Stock Returned 2.5x Since 2018 Despite Stagnant Revenue Growth?

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Micron Technology

Micron Technology (NASDAQ: MU) stock price grew more than 2.5x from around $32 in 2018 end to over $80 currently, primarily due to favorable changes in its P/S multiple. This comes as a surprise, as the company has witnessed a drop in revenue over this period, and revenue per share has remained roughly unchanged, helped by a slight decrease in the outstanding share count.

In our interactive dashboard, Why Micron Technology Stock Moved: MU Stock Has Gained 158% Since 2018, we break down the factors behind this move.

(A) MU’s Total Revenue has dropped 2.5% from $30.4 billion in 2018 to $29.6 billion on an LTM basis

  • MU’s total revenue first dropped from $30.4 billion in FY ’18 (MU’s fiscal year ends in August) to $21.4 billion in FY ’20, primarily due to the semiconductor supply glut and the pandemic hampering sales.
  • Revenues then recovered to as high as $27.7 billion in FY ’21, and currently stand even higher at $29.6 billion on an LTM basis.
  • DRAM semiconductor sales make up the bulk of Micron’s revenues, with $20 billion of the company’s sales coming from this segment as of FY ’21, making up more than 70% of total revenue.
  • For details about MU revenues and comparison to peers, see Micron Technology (MU) Revenue Comparison
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(B) Revenue per share (RPS) increased marginally from $26.38 in 2018 to $26.46 currently

  • MU revenue dropped from $30.4 billion in 2018 to $29.6 billion currently, while the outstanding share count decreased from 1.2 billion in 2018 to 1.1 billion currently.
  • Due to this, RPS has risen only marginally from $26.38 in FY ’18 to $26.46 currently.

(C) Price-To-Sales (P/S) multiple for MU rose steadily from 1.3x in 2018 to 4.3x in 2020, but stands at 3.1x currently, still more than 2x higher than its 2018 level

  • Despite Micron’s inconsistent performance since 2018-end, its P/S multiple increased from 1.3x in 2018 to over 4x in 2020.
  • However, with Micron’s revenues recovering since FY ’20, the P/S multiple has pulled back and currently stands at around 3x.
  • For additional details about the company’s historical returns and comparison to peers, see Micron Technology (MU) Stock Return.

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 Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MU Return -8% -12% 274%
 S&P 500 Return -1% -9% 93%
 Trefis MS Portfolio Return -2% -12% 245%

[1] Month-to-date and year-to-date as of 3/7/2022
[2] Cumulative total returns since the end of 2016

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