MU – Market expectations are for Uniform ROA to fade, but management may have concerns about about growth, movies, and subscriptions

February 9, 2022

  • Micron Technology, Inc. (MU) currently trades well below corporate and recent averages relative to Uniform earnings, with a 9.8x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to fade to near cost-of-capital levels accompanied by 7% Uniform asset growth
  • Meanwhile, analysts expect Uniform ROA to improve to 16% in 2023, accompanied by 7% Uniform asset growth.
  • If sustained going forward, these levels would imply a stock price closer to $242, representing significant equity upside for the firm.
  • However, the firm’s most recent earnings call suggests management may have concerns about demand guidance, growth opportunities, and supply chain.

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