Micron Technology

Methodology

Micron's memory chip earnings are extremely cyclical with DRAM and NAND pricing, making it essential to use mid-cycle normalized earnings rather than peak or trough figures. Supply-demand imbalances create massive profitability swings. Assess sustainable earnings across a complete memory cycle to avoid being misled by temporary pricing conditions.

Methodology

PEG analysis is highly problematic for Micron given extreme earnings volatility, with periods of losses during oversupply followed by exceptional profits during tight markets. During peaks, very low PEG ratios are dangerously misleading as the cycle turns. Focus on price-to-book value and replacement cost analysis rather than earnings-based metrics for commodity memory manufacturers.

Methodology

Micron's dividend policy varies dramatically with the memory cycle, paying dividends during profitable periods but suspending during downturns. The inconsistent payout reflects earnings volatility rather than sustainable yield. PEGY can look attractive at cycle peaks but provides little insight into through-cycle returns given the boom-bust nature of memory pricing.