SUPER MICRO COMPUTER INC (NASDAQ:SMCI) - A Strong Growth Stock With Reasonable Valuation

SUPER MICRO COMPUTER INC (NASDAQ:SMCI) was identified as an affordable growth stock by our screening process. The company combines strong growth metrics with reasonable valuation, solid profitability, and acceptable financial health.

Growth Prospects

• Revenue Growth: SMCI reported an 82.5% year-over-year revenue increase, significantly outpacing many peers in the Technology Hardware, Storage & Peripherals industry.
• Earnings Expansion: Earnings per share (EPS) grew by 18.8% over the past year, with a five-year average annual growth rate of 66.6%.
• Future Expectations: Analysts project continued EPS growth of 27.6% annually, supported by an expected 9.6% yearly revenue increase.

Valuation

• P/E Ratio: At 14.7, SMCI’s P/E ratio is below the S&P 500 average of 24.8 and cheaper than 65.6% of its industry peers.
• Forward P/E: The forward P/E of 9.3 suggests further upside potential, trading at a discount compared to the broader market.
• PEG Ratio: A low PEG ratio indicates the stock is reasonably priced relative to its expected earnings growth.

Profitability & Financial Health

• Strong Margins: SMCI’s profit margin of 5.3% outperforms 75% of industry competitors, with improving operating margins.
• ROIC & ROE: The company generates a 12.7% return on invested capital and an 18% return on equity, ranking well within its sector.
• Liquidity: A current ratio of 6.7 and quick ratio of 4.0 demonstrate strong short-term financial stability.
• Debt Concerns: While solvency metrics are solid, the high debt-to-free-cash-flow ratio (70.1) warrants monitoring.

For a deeper look, review the full fundamental analysis report for SMCI.

Our Affordable Growth screener lists more stocks with similar characteristics and is updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.