Micron Technology Inc. (NASDAQ: MU) has had a rough time since 2014. The only true large domestic survivor in DRAM production migrated into NAND and shares rose from roughly $5.00 in late 2012 to $35.00 for 2014. That was then. Now shares are back down close to $10.00.
Micron recently hosted its analyst day meeting, and 24/7 Wall St. has seen many research reports come out on the DRAM/NAND leader. These analysts have very mixed views, and this is a situation that remains both fluid and in transition. One thing that investors have to consider here, on top of just very mixed views, is that estimates for earnings are all over the place.
It turns out that being in DRAM chips is like being in a commodity business, but where the price of chips only goes down through time. This creates an environment in which investors just do not want to pay up for a market multiple on earnings.
Micron’s Thomson Reuters consensus earnings per share (EPS) estimates are $0.43 for 2016 (August) and $1.48 for 2017. That means that it is valued at 23 times this year’s expected earnings but valued at only seven times next year’s expected earnings. Does it matter that its earnings from a year ago were $2.43 per share?
The many analysts that have keyed in on Micron after the analyst day include Wells Fargo, Merrill Lynch, Credit Suisse, S&P, Morningstar, Cowen, Mizuho, Nomura and Wedbush.
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