earnings strengthened. The party ended in 1Q15 as revenues were flat YoY ($3.90B vs $3.89B) and missed consensus (by 1.3%) while EPS was down ($0.57 vs $0.72) and missed consensus by 6%.. In addition, MU has sold off in the last two months from $26-$28/share
range to $17.61 close.
$21/share offer appears opportunistic at P/E multiples of ~9.7x (CY15) and 7.3x (CY16); the current MC is $19B. MU has $4.86M cash and ST investments and $7.9B debt; it’s a capital intensive company that has spent $8.0B on capex over past four fiscal years. The company has a diversified investor base; it is incorporated in Delaware. One of China's investment goals is expansion in the semiconductor industry, and MU could be a big stepping stone in that direction.
SNDK, a large cap comparable, has traded off more than 50% from its yearly high (~$108/share) and now trades at 12.4x P/E multiple (CY16), which implies $35.50 for MU. Then again, MU FY16 EPS has come down from $3.98 six month ago to $2.53 currently; implied valuation multiples on that kind of forwards earnings estimate volatility requires a large discount; an 8x-9x multiple of CY16E implies a $22.90-$25.75/share takeover value ($25B-$28B MC).
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