Micron Technology, Inc. (NASDAQ:MU) shareholders might be concerned after seeing the share price drop 24% in the last quarter. But the silver lining is the stock is up over five years. In that time, it is up 96%, which isn’t bad, but is below the market return of 102%.
With that in mind, it’s worth seeing if the company’s underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
Check out our latest analysis for Micron Technology
Micron Technology isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over the last half decade Micron Technology’s revenue has actually been trending down at about 2.4% per year. Even though revenue hasn’t increased, the stock actually gained 14%, per year, during the same period. It’s probably worth checking other factors such as the profitability, to try to understand the share price action. It may not be reflecting the revenue.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Micron Technology is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Micron Technology in this interactive graph of future profit estimates.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Micron Technology, it has a TSR of 100% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It’s good to see that Micron Technology has rewarded shareholders with a total shareholder return of 37% in the last twelve months. That’s including the dividend. That’s better than the annualised return of 15% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.