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Does Micron Technology, Inc.'s (NASDAQ:MU) 31% Earnings Growth Make It An Outperformer?

Simply Wall St

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When Micron Technology, Inc. (NASDAQ:MU) released its most recent earnings update (28 February 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Micron Technology's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not MU actually performed well. Below is a quick commentary on how I see MU has performed.

Check out our latest analysis for Micron Technology

How Well Did MU Perform?

MU's trailing twelve-month earnings (from 28 February 2019) of US$13b has jumped 31% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 42%, indicating the rate at which MU is growing has slowed down. To understand what's happening, let's examine what's transpiring with margins and if the rest of the industry is feeling the heat.

NasdaqGS:MU Income Statement, May 8th 2019

In terms of returns from investment, Micron Technology has invested its equity funds well leading to a 37% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 28% exceeds the US Semiconductor industry of 8.3%, indicating Micron Technology has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Micron Technology’s debt level, has increased over the past 3 years from 6.5% to 35%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 66% to 18% over the past 5 years.

What does this mean?

Micron Technology's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Micron Technology gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Micron Technology to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for MU’s future growth? Take a look at our free research report of analyst consensus for MU’s outlook.
  2. Financial Health: Are MU’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 28 February 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.