Micron Keeps Getting Stronger
Micron Technology, Inc. (NASDAQ:MU) is a well-known 5G stock that has seen its share price trend significantly higher over the years. It has transformed from an overlooked penny stock to a leading provider of memory and storage solutions that are used in 5G, artificial intelligence (AI), and the Internet of Things (IoT).
As such, MU stock has captured the attention of Wall Street.
Over the last 10 years, Micron stock has soared by 1,215%, expanding at a compound annual growth rate (CAGR) of 29.4%. Despite the wobbly bull run, MU stock has been bucking the broader market lately, up by 54% year-over-year, versus 26.7% by the S&P 500.
Micron stock has even been outshining its peers.
Defiance 5G Next Gen Connectivity ETF (NYSEARCA:FIVG) is up by 28% year-over-year, First Trust Indxx NextG ETF (NASDAQ:NXTG) is up by 31%, and VanEck Vectors Semiconductor ETF (NASDAQ:SMH) is up by 48%.
However, as you can see in the following chart, MU stock shareholders have had a wild ride.
Chart courtesy of StockCharts.com
Micron stock has lots of room to run in the coming quarters.
Of the analysts providing a 12-month price target for MU stock, their average estimate is $111.69, with a high estimate of $150.00. That suggests potential gains of 51% to 103%.
Micron Initiates Quarterly Cash Dividend
Micron Technology, Inc.’s management has a bullish outlook, and they’re putting their money where their mouths are.
In early August, the company’s board of directors declared a quarterly cash dividend of $0.10 per share. The initial quarterly dividend will be payable on October 18 to shareholders of record as of the close of business on October 1. (Source: “Micron Initiates a Quarterly Cash Dividend,” Micron Technology, Inc., August 2, 2021.)
Micron’s CEO, Sanjay Mehrotra, took the opportunity to discuss the strength of the company and his confidence in its potential.
“Micron’s remarkable transformation over the last several years has put the company in an outstanding position, with technology leadership, a robust product portfolio, enhanced profitability, and a strong, investment grade balance sheet,” said Mehrotra. (Source: Ibid.)
He continued, “This transformation creates the opportunity today to enhance the value of our capital returns program. Initiating a common stock dividend reflects our confidence in Micron’s future and our commitment to creating compelling value for shareholders.”
Micron stock’s dividend payout is on top of the repurchase plan that the company announced in May 2018.
Through the end of the third quarter of fiscal 2021 (ended June 3), Micron Technology, Inc. spent $4.0 billion on share repurchases and the cash settlement of convertible securities. The company retired 90 million shares at an average price of $42.00, which, compared to the current price of $73.00 per share, was a steal.
MU Stock Overview
Micron is a leader in memory and storage solutions. That’s a big deal in the 5G and AI environments, where phones, networks, and applications need a whole lot more data than in the 4G era. (Source: “Capital Allocation Update,” Micron Technology, Inc., August 2, 2021.)
The company’s portfolio of memory and storage technologies includes dynamic random-access memory (DRAM), negative-AND (NAND), 3D XPoint memory, and NOR.
Micron Technology, Inc.’s Compute and Networking Business Unit (CNBU) memory products are sold in the client, cloud server, enterprise, graphics, and networking markets.
The company’s Mobile Business Unit (MBU) provides memory products used by smartphone and other mobile-device businesses.
Its Storage Business Unit (SBU) provides solid state drives (SSDs) and solutions sold in the client, cloud, enterprise, and consumer storage markets, as well as other storage products sold in component and wafer form.
Micron’s Embedded Business Unit (EBU) provides memory and storage products sold in the automotive, industrial, and consumer markets.
Strong Q3 Results
For the third quarter of fiscal 2021 ended June 3, Micron announced that its revenue increased by 36% year-over-year and 19% sequentially to $7.4 billion. (Source: “Micron Technology, Inc. Reports Results for the Third Quarter of Fiscal 2021,” Micron Technology, Inc., June 30, 2021.)
Its third-quarter net income was $1.7 billion, or $1.52 per share. That was more than double the $803.0 million, or $0.71 per share, recorded in the same prior-year period and up by approximately 190% on a sequential basis.
Micron Technology, Inc.’s adjusted net income was $2.2 billion, or $1.88 per share, versus $941.0 million, or $0.82 per share, in the same period last year and $1.1 billion, or $0.98 per share, in the previous quarter.
“Micron set multiple market and product revenue records in our third quarter and achieved the largest sequential earnings improvement in our history,” said Mehrotra. (Source: Ibid.)
“Our industry-leading 1α DRAM and 176-layer NAND now represent a meaningful portion of our production, and Micron is in the best position ever to capitalize on the long-term demand trends across the data center, intelligent edge and user devices.”
With a market cap of $83.2 billion, Micron Technology, Inc. isn’t exactly an overlooked 5G stock.
Micron stock has been rewarding buy-and-hold investors for years, and the company’s outlook is bright.
Micron continues to report record results, and thanks to the high demand for 5G, AI, and IoT technologies, the company had the confidence to initiate a dividend. That’s a big show of confidence, no matter how you look at it.