Micron Technology Stock Has Outperformed The S&P Despite Flat Sales Since 2018 – Here’s Why

-28.63%
Downside
141
Market
101
Trefis
MU: Micron Technology logo
MU
Micron Technology

Micron Technology (NASDAQ: MU) stock price jumped almost 1.8x from $32 at 2018 end, to $56 currently, primarily due to favorable changes in its P/S multiple. This comes as a surprise as the company has witnessed only a 1.2% rise in revenues over this period, and a 3.9% drop in the outstanding share count. Despite this, aided by rising investor expectations, the stock has managed to outperform the S&P, which returned roughly 55% over this same time.

In our interactive dashboard, Why Micron Technology Stock Moved: MU Stock Has Gained 76% Since 2018, we break down the factors behind this move.

(A) MU’s Total Revenue has grown just 1.2% from $30.4 billion in 2018 to around $30.8 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, due to the semiconductor supply glut initially hurting demand, followed by the pandemic which caused supply chain disruptions.
  • Revenues then jumped to $27.7 billion in FY ’21, and currently stand even higher at $30.8 billion as of the most recent FY ’22 (MU’s fiscal year ends in August).
  • However, compared to FY ’18, sales in FY ’22 stand only marginally higher.
  • DRAM semiconductor sales make up the bulk of Micron’s revenues, with $22.4 billion of the company’s sales coming from DRAM semiconductors as of FY ’22, making up around 73% of total revenue.
  • For additional details about MU revenues and comparison to peers, see Micron Technology (MU) Revenue Comparison
Relevant Articles
  1. Up 52% This Year As Memory Market Picks Up, Will Micron Stock Rise Further Following Q3 Earnings?
  2. Up 30% This Year, Will AI Tailwinds Drive Micron Stock Higher?
  3. Up 12% This Year On AI Tailwinds, Will Micron Stock See Further Gains Following Q2 Results?
  4. Digital Infrastructure Stocks Including Micron Had A Solid Year. What Lies Ahead?
  5. Why Digital Infrastructure Stocks Such As Micron Are Outperforming
  6. Will Surging Demand For High-Bandwidth Memory Help Micron Stock?

(B) Revenue per share (RPS) rose 5.3% from $26.38 in 2018 to around $28.00 currently

  • MU revenue rose from $30.4 billion in 2018 to $30.8 billion currently, while the outstanding share count decreased 4% over this period, coming in at around 1.1 billion currently.
  • Due to this, RPS has risen around 5.3% from $26.38 in FY ’18 to $28.24 currently.

(C) Price-To-Sales (P/S) multiple for Micron jumped from 1.2x in 2018-end to 3.9x by 2020 end, but has pulled back to around 2x currently, still almost 1.7x higher than its 2018 level

  • Despite Micron’s subdued performance between 2018 and 2020, its P/S multiple rose strongly from 1.2x in 2018-end to as high as 3.9x by late 2020, on the back of rising investor expectations.
  • However, due to the increased economic uncertainty weighing on the broader markets and concerns over continuing supply chain headwinds, the P/S multiple has pulled back, currently standing at around 2x, still almost 70% higher than its 2018 level.
  • For additional details about the company stock returns and comparison to peers, see Micron Technology (MU) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Oct 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MU Return 12% -40% 155%
 S&P 500 Return 8% -19% 72%
 Trefis Multi-Strategy Portfolio 6% -22% 209%

[1] Month-to-date and year-to-date as of 10/26/2022
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates