Entering text into the input field will update the search result below

Micron: Ignore The Noise, And Keep Dreaming

Dec. 03, 2018 7:55 AM ETMicron Technology, Inc. (MU)111 Comments
DTF Capital profile picture
DTF Capital


  • Micron’s CEO Sanjay Mehrotra has been a straight shooter since joining the company.
  • We report the key points he made at the UBS and Credit Suisse conferences in November.
  • The long-term demand is reiterated as secular, and the oversupply issue is temporary.
  • Drops of hints on the DRAM and NAND oversupply situation and gross margin shows a stable business.
  • The long-term vision of Micron as the only one-stop shop for storage and memory solutions is worth dreaming and waiting for.

Investment thesis

Micron (NASDAQ:MU) is an investment that does not exist in the academic world. With a unique mix of products, a world-class top management team and pristine fundamentals, the perception of this high intrinsic value should be reflected in an equally high price tag. Yet, we find this stock trading at less than 4x PE. Maybe the market is inefficient after all.

We have never felt easily convinced of an investment such as Micron. Mr. Market has knocked on our door, and we have said yes to the price so many times that we have accumulated enough shares to make it the biggest position in our portfolio.

Confirmation bias or not, we feel compelled to report the facts that CEO Sanjay Mehrotra has presented at the recent UBS and Credit Suisse Technology conferences. The numbers and the vision that Sanjay presented make total sense for us. Let’s go through one by one.

For reference, please read the transcripts provided here: UBS Global Technology, and Credit Suisse Technology.

Q1-2019 revenue and EPS will be within guidance

We wished that Sanjay had not announced the FQ1 revenue and EPS numbers. Had he kept his silence, the figures would create a more considerable surprise to the market at the actual earnings results day. Nevertheless, the facts are out, and investors can still invest in Micron at a wonderful price, albeit at a slightly higher price, trading for higher certainty.

As a reminder, as at Q4-18, the forward Q1-19 guidance was:

  • Revenue: $7.9B and $8.3B,
  • EPS:$2.87 and $3.02.

Sanjay announced that Micron’s revenue will achieve the lower end of guidance, roughly $7.9B, and EPS will be at the higher end of the guidance, at $2.95 plus. Great results here!

Demand trend is secular and stable

Sanjay reminded investors that the demand is

This article was written by

DTF Capital profile picture
I run Sleep Well Investments to find time-tested and anti-fragile businesses to help you avoid permanent capital losses - the first rule of investing. All businesses go through a comprehensive review, I call it a ‘sleep well investment’ checklist, to evaluate their (i) business quality, (ii) competitive position and risks, and (iii) valuation. They are given a score and a trigger (buy) price to ensure a high margin of safety.The first few write-ups are: The VAT Group - The Vaccum Valve Monopoly Shimano - The Bike Component Monopoly Floor and Decor - Future Home Improvement Monopoly Subscribe for more sleep-well investments.

Analyst’s Disclosure: I am/we are long MU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.