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