Super Micro Computer (NASDAQ: SMCI) stock price has moved sideways in the past three months as the recent bull run fades. The shares have remained inside a wide range between $228.90 and $318 in this period. They have jumped by over 900% since 2021, outperforming Nvidia, which is up by less than 300%
Nvidia stock vs Super Micro Computer
More room to grow?Super Micro Computer is a semiconductor company that designs and sells numerous products in the server and storage industry. Some of its top products are SuperBlade and MicroBlade, SuperStorage, Ultra Server, and MicroCloud server systems. It also sells software management solutions to companies.
Super Micro Computer has been growing at a fast pace over the years. Its revenue stood at over $3.5 billion in 2029 and over $7.1 billion in the last financial year. Revenue in the trailing twelve months was $7.39 billion.
Unlike other fast-growing companies, Super Micro has also been highly profitable as its net income jumped from $71.9 million to $640 million. Most importantly, the company has little debt. Its cash and short-term investments were over $543 million against long-term debt of over $105 million.
Therefore, from a valuation standpoint, I believe that the company is quite undervalued despite its fast growth. Super Micro has a forward PE ratio of 18.29, lower than the S&P 500 average. It also has a PEG ratio of 0.78, which is ideal. In most cases, companies with a PEG ratio of over 1 are said to be relatively overvalued.
The most recent Super Micro Computer were relatively positive as its total revenue jumped by 14.5% YoY to over $2.1 billion. These results were better than expected by more than $57 million. They were also better considering that the industry went through substantial GPU and key component shortages.
The only blemish in the report was its gross and operating margins, which came in lower than expected. Gross margins dropped to 17% while operating margins slipped to 10.8%. The company also allocated more money towards stock-based compensation.
Stil, SMCI is set to continue growing as interest rates and inflation fall and as the world economy recovers. The management believes that the total revenue for the current quarter will be between $2.7 billion and $2.9 nillion.
Super Micro Computer stock price analysis
Turning to the daily chart, we see that the SMCI share price peaked at $357.75 in August and then pulled back as concerns about growth continued. Since then, it has remained inside the support at $230 and resistance at $317. The shares have remained above the 50-day and 100-day Exponential Moving Averages (EMA).
I have a bullish outlook for the stock, with the initial target being the upper side of the range at $317.75. A break above that level will see bulls target the YTD high, which is 22% above the current level.
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