In this series, we’ve seen that Micron Technology (MU) stock has outperformed the market due to a favorable pricing environment in the DRAM (dynamic random access memory) market.
Looking at Micron’s stock movement for the last 12 months, it’s clear that the stock is very volatile. It has a beta of 1.89, whereas Intel (INTC) has a beta of 1.05. Western Digital (WDC) is more volatile than Micron with a beta of 2.22. Beta is a measure of volatility in which less than one is less volatile and more than one is more volatile.
Currently, institutional investors own 81.1% and insiders own 0.69% of the total outstanding shares of Micron. According to Micron’s SEC (U.S. Securities and Exchange Commission) filings, several institutional investors increased or decreased their positions in the quarter that ended on March 31, 2017.
Institutional activity picked up in 1Q17 as DRAM (dynamic random access memory) prices increased due to a strong seasonal demand. Here’s what happened during the quarter:
- The Vanguard Group increased its stake in Micron 4.9% to $2.5 billion worth of stock.
- Janus Capital Management increased its stake in Micron 232.4% to $161.0 million worth of stock.
- Legal & General Group increased its stake in Micron 2.1% to $150.0 million worth of stock.
- Teachers Advisors increased its stake in Micron 2.9% to $140.0 million worth of stock.
While institutional investors increased their holdings in Micron, insiders booked profits by selling some of their shares in the company. They’ve sold $6.9 million worth of shares over the last 90 days. Brian Shirley, Micron’s vice president of Memory Technology and Solutions, sold shares worth $2.5 million on March 28, 2017. He now owns $10.8 million worth of shares in the company.
Nanya sells stake in Micron
On June 16, 2017, Taiwan’s (EWT) Nanya Technology sold a partial stake in Micron for a total consideration of $40.0 million to repay loans and fund its working capital requirements, according to a DigiTimes report. Nanya now holds a 5.1% stake in Micron.
Nanya’s stake in Micron is due to Micron’s acquiring Nanya’s stake in the Inotera joint venture for $4.0 billion, of which $1.0 billion was paid in Micron equity shares.
At the end of June 19, 2017, Micron had a market capitalization of $34.5 billion, which is 1.8 times its projected fiscal 2017 revenue of $19.6 billion. Micron’s market capitalization to revenue ratio is lower than Intel’s ratio of 2.8x but higher than Western Digital’s ratio of 1.4x. That shows that investors are more optimistic about Micron’s revenue growth potential than Western Digital’s.
Next, let’s look at Micron’s price ratios and see if the stock is fairly valued.