Financial Analysis: Micron Technology (NASDAQ:MU) versus Cree (CREE)

Micron Technology (NASDAQ: MU) and Cree (NASDAQ:CREE) are both mid-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, institutional ownership, earnings and profitability.

Earnings and Valuation

This table compares Micron Technology and Cree’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Micron Technology $20.32 billion 2.22 $9.73 billion $4.32 9.40
Cree $1.46 billion 2.20 $96.06 million ($1.22) -26.90

Micron Technology has higher revenue and earnings than Cree. Cree is trading at a lower price-to-earnings ratio than Micron Technology, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Micron Technology and Cree’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Micron Technology 25.04% 32.09% 16.15%
Cree -8.42% -0.44% -0.37%

Institutional and Insider Ownership

77.1% of Micron Technology shares are owned by institutional investors. Comparatively, 91.2% of Cree shares are owned by institutional investors. 0.7% of Micron Technology shares are owned by company insiders. Comparatively, 1.1% of Cree shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Micron Technology has a beta of 1.82, suggesting that its stock price is 82% more volatile than the S&P 500. Comparatively, Cree has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Micron Technology and Cree, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Micron Technology 1 3 28 0 2.84
Cree 4 8 2 0 1.86

Micron Technology currently has a consensus price target of $46.24, indicating a potential upside of 13.90%. Cree has a consensus price target of $26.21, indicating a potential downside of 20.15%. Given Micron Technology’s stronger consensus rating and higher probable upside, analysts clearly believe Micron Technology is more favorable than Cree.

Summary

Micron Technology beats Cree on 11 of the 13 factors compared between the two stocks.

About Micron Technology

Micron Technology, Inc. is engaged in semiconductor systems. The Company’s portfolio of memory technologies, including dynamic random-access memory (DRAM), negative-AND (NAND) Flash and NOR Flash are the basis for solid-state drives, modules, multi-chip packages and other system solutions. Its business segments include Compute and Networking Business Unit (CNBU), which includes memory products sold into compute, networking, graphics and cloud server markets; Mobile Business Unit (MBU), which includes memory products sold into smartphone, tablet and other mobile-device markets; Storage Business Unit (SBU), which includes memory products sold into enterprise, client, cloud and removable storage markets, and SBU also includes products sold to Intel through its Intel/Micron Flash Technology (IMFT) joint venture, and Embedded Business Unit (EBU), which includes memory products sold into automotive, industrial, connected home and consumer electronics markets.

About Cree

Cree, Inc. is a manufacturer of lighting-class light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency (RF) applications. The Company’s products are focused for applications, such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems. The Company has three segments: Lighting Products, LED Products, and Power and RF Products. The Company’s Lighting Products segment offers LED lighting systems and bulbs. The Company’s LED Products segment offers LED components, LED chips and silicon carbide (SiC) materials. The Company’s Power and RF Products segment offers power devices and RF devices. The Company designs, manufactures and markets lighting systems for indoor and outdoor applications, with a focus on LED lighting systems for the commercial, industrial and consumer markets.

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