S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
Israel hails 'success' in blocking Iran's unprecedented attack. Biden now seeks diplomatic response
Germany's Scholz arrives in China on a visit marked by trade tensions and Ukraine conflict
Diplomat tapped as Latvia's new foreign minister as incumbent quits following flights scandal
India's Modi vows to boost social spending, make country into a manufacturing hub ahead of election
Can homeless people be fined for sleeping outside? A rural Oregon city asks the US Supreme Court
Olympic track uniforms spark online debate about who designed them and why they're so skimpy
The craze for Masters gnomes is growing. Little golf-centric statue is now a coveted collector item
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
Israel hails 'success' in blocking Iran's unprecedented attack. Biden now seeks diplomatic response
Germany's Scholz arrives in China on a visit marked by trade tensions and Ukraine conflict
Diplomat tapped as Latvia's new foreign minister as incumbent quits following flights scandal
India's Modi vows to boost social spending, make country into a manufacturing hub ahead of election
Can homeless people be fined for sleeping outside? A rural Oregon city asks the US Supreme Court
Olympic track uniforms spark online debate about who designed them and why they're so skimpy
The craze for Masters gnomes is growing. Little golf-centric statue is now a coveted collector item
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
Israel hails 'success' in blocking Iran's unprecedented attack. Biden now seeks diplomatic response
Germany's Scholz arrives in China on a visit marked by trade tensions and Ukraine conflict
Diplomat tapped as Latvia's new foreign minister as incumbent quits following flights scandal
India's Modi vows to boost social spending, make country into a manufacturing hub ahead of election
Can homeless people be fined for sleeping outside? A rural Oregon city asks the US Supreme Court
Olympic track uniforms spark online debate about who designed them and why they're so skimpy
The craze for Masters gnomes is growing. Little golf-centric statue is now a coveted collector item
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
Israel hails 'success' in blocking Iran's unprecedented attack. Biden now seeks diplomatic response
Germany's Scholz arrives in China on a visit marked by trade tensions and Ukraine conflict
Diplomat tapped as Latvia's new foreign minister as incumbent quits following flights scandal
India's Modi vows to boost social spending, make country into a manufacturing hub ahead of election
Can homeless people be fined for sleeping outside? A rural Oregon city asks the US Supreme Court
Olympic track uniforms spark online debate about who designed them and why they're so skimpy
The craze for Masters gnomes is growing. Little golf-centric statue is now a coveted collector item

Nothing Micro About Super Micro Computer's Price & Earnings Gains

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Nothing Micro About Super Micro Computers Price & Earnings GainsThere are glamorous techs, such as cloud computing, networking, and cybersecurity firms, and then there are companies like Super Micro Computer NASDAQ: SMCI, which makes power boards, chassis, and other gear for servers and networks. 

Key Points

  • Earnings growth accelerated in the past four quarters, beginning with 5% growth, then rising to 40%, 210%, and 223%.
  • Revenue growth has gradually accelerated from 16% in the quarter.
  • The company expects net sales in a range between $1.7 billion and $1.8 billion.
  • 5 stocks we like better than Super Micro Computer

But it doesn’t always take a “celebrity stock” like chipmaker Nvidia NASDAQ: NVDA to add alpha to a portfolio. Super Micro’s trading volume is more than double normal levels this month, as the stock trades 18% higher.

Super Micro, which has a market capitalization of $4.3 billion, putting it in the mid-cap territory, gapped up 12.50% on November 1, following the company’s consensus-beating first-quarter report. 

The San Jose, California, company earned $3.42 per share on revenue of $1.852 billion. That was an impressive gain of 79% on the top line, but a breathtaking gain of 490% on the bottom line. Earnings growth accelerated in the past four quarters, beginning with 5% growth, then rising to 40%, 210%, and 223% until rising even more in this quarter.

Revenue growth has gradually accelerated from 16% in the quarter that ended in March 2021, rising on a year-over-year basis in each quarter. 

Other highlights from the quarterly report included:

  • Gross margin of 18.8% versus 17.6% in the fourth quarter of the fiscal year 2022 and 13.4% in the same quarter of last year.
  • Cash flow provided by operations for the first quarter of the fiscal year 2023 of $314 million and capital expenditures of $11 million.

In the earnings release, CEO Charles Liang said the company’s past seven quarters of revenue growth is “about 10 times faster than the current industry average. It proves that our Green Computing and Total IT Solutions continue to gain customers’ acceptance and trust. We recognize the opportunities being driven by more demanding computing, storage, telco and AI workloads.

Super Micro is currently in the second quarter of fiscal 2023. For the current quarter, the company expects net sales in a range between $1.7 billion and $1.8 billion, above the consensus estimate, and net income between $2.64 and $2.90, above analysts’ consensus estimate of $2.58 per share. 


Raised Full-Year Guidance 

For the full fiscal year, which ends June 30, Super Micro raised its guidance for net sales from a previous range of $6.2 billion to $7.0 billion, to a range between $6.5 billion and $7.5 billion. It expects earnings per share to land in a range between $9 and $11.30. That’s higher than analysts had anticipated. 

According to MarketBeat earnings data, Super Micro has a long history of exceeding both top- and bottom-line views. 

That’s a good sign for the stock’s future, but keep in mind: It’s not uncommon for a small company like Super Micro to have sparse analyst coverage, and that’s the case here. MarketBeat analyst ratings reveal only six analysts covering the stock, and none are the big investment banks that underwrite offerings and manage merger and acquisition transactions.

Analysts’ consensus rating on the stock is “hold,” with a price target of $88, representing a 7.10% upside. 

Holding Gains From Cup Breakout 

The stock’s chart shows a cup-pattern breakout, which occurred on November 1 following the earnings report. Ths stock advanced 7.43% in the past week and 52.11% in the past month. Super Micro has been in rally mode since March, and has posted a year-to-date return of 86.96%. 

That kind of return is an indication that it’s not only the well-known, large-cap stocks that are worth of watchlist consideration. Of course, smaller stocks can be more volatile than larger counterparts, and that’s certainly the case with Super Micro, which has a beta of 1.27. 

Should you invest $1,000 in Super Micro Computer right now?

Before you consider Super Micro Computer, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Super Micro Computer wasn't on the list.

While Super Micro Computer currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Super Micro Computer (SMCI)
4.778 of 5 stars
$898.49-4.1%N/A70.14Moderate Buy$865.23
NVIDIA (NVDA)
4.6807 of 5 stars
$881.86-2.7%0.02%73.86Moderate Buy$926.30
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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