Micron Technology (MU, Financial) has been a terrific performer for investors in the past year. The stock prices have soared in excess of 155% in the last year and roughly 48% this year, outperforming the 8% development of the S&P 500. Micron Technology's string of positive earnings results and impressive fundamentals have allowed the memory chipmaker to deliver strong results.
Micron Technology's stock value surge has been overall supplemented by an impressive development in the top line, which has increased 72% second from last quarter contrasted with the same quarter in the last year. The bottom line excessively surged 10%, as the organization has delighted in high margins alongside increasing revenue.
Going forward
After the Elpida acquisition, Micron has now become the fourth-largest organization in chip making, on the off chance that we think about it on the basis of sales development. Elpida has been a significant supplier of portable memory chips for Apple (AAPL, Financial), which has helped Micron's increasing revenue. Further, Apple's development in its desktop, laptop and approaching iphone 6 should energize the interest for Micron's DRAM.
The organization's innovations in DRAM, NAND and Flash memory, alongside its customized solutions for various versatile and machine companies which are looking to improve performance and decrease size should profit it over the long haul.
Separated from the increase in organization's own particular strength, the surge in the interest for DRAM and NAND memory chips should also profit it later on.
Margins should make strides
As of late, there has been a colossal hole popular and supply in the DRAM market. Samsung's assembling limit suffered, as it was relocating the generation of 20,000 wafer starts for DRAM chips to 25nm process. Further, SK Hynix's creation limit was also influenced, as its memory plant in Wuxi, China, was harmed by a fire breakout. Both the companies will enhance their creation limit in the end, yet until then, Micron can easily appreciate higher margins by increasing its cost.
An alternate reason to accept that Micron can enhance its margins is that its 34% gross margin is still a long way behind different players of the industry. These include Samsung and Sandisk. Despite the fact that the organization generates a gross margin in the high 30% range in the DRAM segment, while in the market NAND, it has a margin in the high 20%.
About two-fifths of Sandisk's generation is triple-level cell (TLC) NAND, which is in as much demand as Micron's NAND chips and are priced 20% lower, which boosts Sandisk's margins. Micron's top administration excessively has understood the mistake of not focusing on TLC prior and has made moves to enhance it.
The organization is restructuring itself to handle the concerns in its NAND business, and Durcan believes that the normal improvements should start conveying by one year from now. Additionally, Micron's SSD item dispatch, which is in immense demand over the customary hard drives, should also enhance both the top line and bottom line of the organization.
Conclusion
Micron Technology's performance has been eye-catching in 2014. The organization is good to go further bolstering good fortune itself from the general development in the memory market. Further, the organization is generally positioned to enhance its margins by exploiting the interest and supply hole. The expansion of clients such as Apple, after the acquisition of Elpida, should lead to stability in its revenue over the long haul. At a forward earnings multiple of 10 times, Micron is a safe wager with all the future prospects visible.
