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Last update on 2024-06-06

Micron Technology (MU) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Gain insight into the financial strength of Micron Technology (MU) with the Piotroski F-Score analysis for 2023. Learn key metrics evaluating profitability, liquidity, and operating efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 4

We're running Micron Technology (MU) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
0
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is a model used to assess a company's financial position and determine strong, undervalued stocks with good investment potential. It scores a company from 0 to 9 based on criteria such as profitability, liquidity, and leverage. Micron Technology (MU) received a Piotroski Score of 4. Here's a breakdown: Profitability: - The net income for 2023 is -$5.833 billion (0 points) - Positive operating cash flow for 2023 at $1.559 billion (1 point) - Return on Assets (ROA) for 2023 dropped significantly (0 points) - Operating cash flow is higher than net income (1 point) Liquidity: - Leverage increased, indicating higher debt dependency (0 points) - Current Ratio improved from 2.8891 to 4.4583 (1 point) - Outstanding shares decreased suggesting share buybacks (1 point) Operating Efficiency: - Gross Margin declined dramatically (0 points) - Asset Turnover Ratio decreased (0 points) Overall, MU has mixed signals in its financial health with a score of 4 out of 9.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski Score of 4, Micron Technology (MU) has mixed financial health. It shows strength in cash flow and liquidity but is facing challenges with profitability and efficiency. The significant rise in debt and decline in gross margin are concerning. For investors, it's crucial to further evaluate these weaknesses and consider the higher financial risk. Therefore, it might be worth being cautious and looking for more stable alternatives or exploring additional details about Micron's future plans before investing.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Micron Technology (MU)

Company has a positive net income?

The net income criterion examines whether a company is profitable or not. Positive net income indicates profitability, essential for long-term sustainability.

Historical Net Income of Micron Technology (MU)

For Micron Technology (MU), the net income in 2023 is negative, standing at -$5.833 billion. Over the past 20 years, Micron has experienced significant fluctuations in its net income. Dramatic highs include $14.135 billion in 2018 and lows like -$1.835 billion in 2009. This negative trend in 2023 is concerning and indicates potential profitability issues; thus, 0 points are assigned for this criterion.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) evaluates the amount of cash a company generates from its regular operating activities. Positive cash flow indicates a company is self-sustaining.

Historical Operating Cash Flow of Micron Technology (MU)

For Micron Technology in 2023, the CFO stands at a positive $1,559,000,000, which is a key indicator of the company's ability to generate cash internally. This is a positive trend, meriting 1 point in the Piotroski analysis. Over the last 20 years, MU has consistently maintained positive CFOs, peaking at $17,400,000,000 in 2018. Despite year-to-year fluctuations, a positive trend is generally seen, reinforcing the company's operational strength and suggesting stability in its core business operations.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) assesses a company's ability to efficiently utilize its assets to generate profits. A positive change signifies improved financial health.

Historical change in Return on Assets (ROA) of Micron Technology (MU)

In 2023, Micron Technology (MU) experienced a significant decline in ROA to -0.0894 from 0.1388 in 2022. This negative change indicates a deterioration in the company’s efficiency in using its assets to generate profits. Adding to the concern, the industry median ROA has been consistently around 0.48. Over the past two decades, Micron's ROA fluctuated significantly, with highs following robust operating cash flows, but the current dip pushes Micron's performance well below the industry standard, signaling potential issues in asset utilization. This trend earns a score of 0 for the Piotroski criterion.

Operating Cashflow are higher than Netincome?

The criterion examines if a company's Operating Cash Flow is higher than its Net Income, a sign of quality earnings.

Historical accruals of Micron Technology (MU)

For the fiscal year 2023, Micron Technology reports an Operating Cash Flow of $1.559 billion compared to its Net Income of -$5.833 billion. The Operating Cash Flow being significantly higher than the Net Income indicates a solid ability to generate cash, suggesting higher quality earnings. This fulfills the criterion, thereby adding 1 point to Micron's Piotroski score, which is positive.

Liquidity of Micron Technology (MU)

Leverage is declining?

Change in Leverage assesses the company's use of debt to finance assets, crucial for evaluating financial stability and risk.

Historical leverage of Micron Technology (MU)

In 2022, Micron Technology had a leverage ratio of 0.1118, which increased to 0.2125 in 2023. Given this rise, the company has increased its dependency on debt in 2023, translating to a 90.11% increase in leverage. The 20-year leverage data for Micron Technology indicates fluctuations, with the highest ratio observed in 2016 at 0.2951 and the lowest in both 2014 and 2015 at approximately 0.002. Although leverage increases may provide funding for growth initiatives, a rising ratio typically raises concerns about financial risk and stability. Such a spike in 2023 may signal heightened risk, precluding Micron from gaining a point under this criterion.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets. An increase in the Current Ratio indicates improved liquidity.

Historical Current Ratio of Micron Technology (MU)

The Current Ratio for Micron Technology (MU) has indeed risen from 2.8891 in 2022 to 4.4583 in 2023. This trend signifies a positive development, reflecting an improvement in the company's liquidity. This means Micron Technology's ability to cover its short-term liabilities with its short-term assets has strengthened, which enhances its financial stability and reduces liquidity risk. Historically, Micron's Current Ratio has fluctuated, peaking in 2023. Compared to the industry median, which was 3.4213 in 2023, Micron's liquidity outperforms its peers. This increment in the Current Ratio contributes favorably to the Piotroski F-Score criteria, thus earning it 1 point.

Number of shares not diluted?

This criterion considers whether a company is reducing its shares outstanding, which can be a sign of share repurchases or reduced dilution, often serving as a positive indicator for shareholders.

Historical outstanding shares of Micron Technology (MU)

In 2022, the outstanding shares for Micron Technology (MU) stood at 1,112,000,000. By 2023, this number decreased to 1,093,000,000. This reduction in outstanding shares represents a decrease in share count, which is generally a sign of share buybacks. Share buybacks are typically seen as a positive for shareholders because they reduce the number of shares available in the market, potentially increasing the value of the remaining shares. Given the trend, Micron Technology should be awarded 1 point for this criterion.

Operating of Micron Technology (MU)

Cross Margin is growing?

Gross Margin measures a company's financial health and business efficiency.

Historical gross margin of Micron Technology (MU)

A comparison of Micron Technology's Gross Margin between 2022 and 2023 shows a significant decline from 0.4518 to -0.0911. This dramatic decrease points to increasing cost pressures or declining sales efficiency. Notably, Micron's Gross Margin significantly lags behind the industry median, which stood at 0.4919 in 2023, indicating relative underperformance and operational challenges. Consequently, Micron Technology scores 0 points as the Gross Margin has decreased in 2023.

Asset Turnover Ratio is growing?

Change in Asset Turnover indicates how efficiently a company is using its assets to generate revenue.

Historical asset turnover ratio of Micron Technology (MU)

In reviewing Micron Technology's (MU) Asset Turnover ratio, there is a notable decrease from 0.4916 in 2022 to 0.2381 in 2023. This shift indicates that Micron Technology has become less efficient in utilizing its assets to generate sales. Over a span of 20 years, we observe significant fluctuations, including peak efficiency at 0.7861 in 2014 and a steady decline in more recent years, with 2023 marking the lowest point. Given this trend, the Asset Turnover does not merit an additional point as it signifies a deteriorating efficiency.


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