Micron Trades at 6 Times Next Year's Earnings. The $38 Billion of Capacity That Ends This Cycle Doesn't Open Until 2028.
The memory specialist is priced as if the boom ends imminently. The industry's own construction schedules point years further out.
Overview
Memory specialist Micron Technology (NASDAQ: MU) trades near $878 as of this writing, at about 20 times its trailing earnings but only about 6 times the earnings analysts expect over the coming year. Earnings are climbing so fast that next year's expected number dwarfs the trailing one. And the market is paying about 6 times for it because it assumes the good times end soon.
Memory has always worked that way: High prices attract new supply, and new supply ends the boom.
Details
But last Friday, the supply that is supposed to end this one got a price tag and a schedule. SK Hynix committed about $38 billion to two new fabs -- and the first of them doesn't open a clean room until December 2028.
Source
Originally published at www.fool.com.