u/Constant-Bridge3690 ·
Reddit — r/ValueInvesting
· June 28, 2026 at 15:53
· ⬆ 17 pts
· 💬 28 comments
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AI Summary
Summary
The post analyzes Micron (MU) using a proprietary “Value Score” that compares revenue growth and operating margin to enterprise value over projected operating income.
The author calculates a Value Score of 13.7 (versus a buy threshold of 2.0) based on average analyst forecasts of $234.56B revenue for FY2027 (81% growth) and a 60% gross margin assumption.
Thesis: MU is a Strong Buy for at least the next 12 months, as even a severe gross margin collapse to 40% still yields a Value Score of 8.2, well above the buy threshold.
Quality assessment: Well-researched due diligence with quantitative framework, but relies on consensus revenue forecasts and cyclical memory assumptions; moderate depth.
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Micron reported earnings last Wednesday and many people want to know if there is still juice left to squeeze in the stock.
My framework for evaluating stocks is to compare the sum of the projected revenue growth and trailing operating margin to the ratio of enterprise value divided by projected operating income. This is summarized in a number that I call Value Score. The median Value Score for all publicly traded companies is about 1.0. If the Value Score is above 2.0, then I consider the stock a buy candidate.
[MU Valuation Analysis](https://docs.google.com/spreadsheets/d/11a-IdIyfte1_Hzj4J-nuuomuJDIln6S-Ue8c8haFl-8/edit?usp=sharing)
The average FY 2027 revenue forecast from 40 analysts, as tracked by Yahoo Finance, is $234.56 billion, or 81% growth from FY 2026. I assumed the gross margin for FY 2027 drops to 60% and overhead is about 10% of revenue. With these assumptions, Micron’s Value Score is 13.7!
A lot of people prefer to look at free cash flow over operating income. On that basis, Micron’s Adjusted Value Score is 11.9.
The risk of MU is that the current frenzy for memory is temporary until supply eventually catches up with demand. I also track the company’s inventory levels, as measured by day’s sales outstanding. It has stood around 120 days for four quarters in a row. Meanwhile, gross margin exploded from the high 30s to 85% last quarter.
In summary, I believe MU is a Strong Buy for at least the next twelve months. Even if gross margin were to collapse back to 40%, the Value Score would still be 8.2, which is still far above my 2.0 threshold.
Average FY2027 revenue forecast is $234.56B (81% growth from FY2026); gross margin assumed at 60% with overhead at 10% of revenue. The Value Score of 13.7 (and adjusted free cash flow score of 11.9) far exceeds the author’s 2.0 buy threshold, indicating significant upside mispricing. Strong Buy based on projected growth and margin resilience; even if gross margin collapses to 40%, the score remains 8.2. Memory cycle oversupply could compress margins; inventory days sales outstanding steady at 120 while gross margin spiked to 85%, suggesting potential imbalance.
This Reddit post, published June 28, 2026,
features u/Constant-Bridge3690
discussing MU.
1 trade idea extracted by AI with direction and confidence scoring.