Michael Wiggins De Oliveira
Deep Value Returns, Equity Investing without Options or Leverage
Micron is a complete bargain at just 12x the most conservative estimate of its FY2027 free cash flow, supporting a $1,800 price target for the end of 2027. If it delivers anything close to the $100 billion of FCF expected, today's price should look like a massive opportunity in hindsight. The shares are down 13% over three months despite a very strong report. x.com
Micron's cash generation looks durable rather than temporary, supporting a $1,800 price target by the end of 2027. It just generated $18B of free cash flow in a single quarter, revenue is exploding, margins are expanding rapidly, and Q4 revenue is expected to reach $50B. Investors are too focused on whether the memory ramp lasts two quarters or two years instead of seeing a medium-term secular demand story. x.com x.com x.com
Micron's FY2028 earnings could substantially exceed the displayed $206.89 normalized EPS estimate, leaving the shares at about 3x FY2028 EPS. A beat of at least 30-50% depends on demand, pricing, margins and buybacks. x.com
Micron's revenue grew faster than its stock over the past year, leaving it cheaper on trailing earnings. Quarterly revenue rose from $11.3B to $54.2B, while the stock rose from about $198 to $878 and trailing P/E fell from roughly 24x to 11.6x. x.com
Micron looks expensive on price-to-book at about 8x versus a historical average of about 2x, and relying on forward P/E for such a cyclical business can be dangerous. x.com
Micron trades at an absurd 4-5x P/E on $200–$220 of annual EPS while Wall Street keeps moving the goalposts. On September 30, CEO Sanjay Mehrotra should report $35–$38 of EPS versus guided $30–$31 and call it a structural boom, yet the market will still ask for the next quarter. Free cash flow at levels none of the Big Five match could fund a buyback of up to 40% of its market cap. x.com
Micron's sold-out high-bandwidth memory through 2027+ and contracts already being signed for 2029-2030+ extend its earnings runway. At 5x forward earnings, it is cheaper than a year ago; its private Anthropic stake is about to be instantly rerated at Anthropic's IPO, and a new share buyback is expected to be announced Dec. 9. Micron could certainly gain 30% in three months. x.com x.com
If Micron has only two years of decent forecasts, its limited visibility warrants a lower multiple, not a higher one. x.com
Micron's cash generation puts a rising floor under the stock: it is effectively raising more than $160 of cash per share on a forward basis, about $1 every two trading days. Even on a conservative path of $160, $100, $80, $50 and $40 a year as earnings fall, it would earn $430 of cash per share in five years, against a premarket price of $830. x.com
Micron's valuation looks ridiculous given the street's eight-year EPS estimates, even with a projected 2028 earnings peak and subsequent decline. At under $900, it trades at 5.09 times this year's expected EPS of $176.55. If consensus plays out, 2027-34 EPS would total $921.56, more than the share price; if analysts are wrong about when EPS peaks, Micron would look even cheaper. x.com
Micron faces a severe crash risk from CXMT's current threat and apparent investor complacency after a euphoric high. If the Wall St Cheat Sheet fits, most of Micron's gains across 40 years, amassed in just one year, could be erased soon. Earlier, Elon Musk said Micron had been reasonable on future memory prices; memory stocks were not yet to be faded. x.com x.com
Micron can't meet customer demand, giving it rare visibility at a valuation of about 5x next year's earnings. CEO Sanjay Mehrotra said customers are extending agreements into 2031, which gives certainty of demand and lets Micron plan capacity investments with confidence. The stock is now about $1,000, and with potential EPS beats over the next few quarters its forward P/E could be around 5, unthinkable about six months ago. x.com x.com
