Super Micro Computer Beats Top And Bottom Line Estimates: Wall Street Analysts Revise Estimates Up

KennethLong
2023-08-10

$SUPER MICRO COMPUTER INC(SMCI)$ Super Micro Computer Beats Top And Bottom Line Estimates: Wall Street Analysts Revise Estimates Up


Summary

  • Super Micro Computer tumbled more than 22% in trading on Wednesday even as Wall Street praised the company's fourth quarter results and guidance.

  • SMCI is a Quant Hold. A Quant Hold does not mean Sell. The valuation of the stock is improving as the shares declined today and analysts are in the process of revising their earnings estimates up.

  • Uncertainty around the longevity of gross margins being maintained at record levels has contributed to the sell-off.

  • SMCI continues to have strong fundamentals, improving value, rocket growth, and a tremendous balance sheet that is allowing SMCI to expand globally.

pirankapiranka

SMCI Is A Hold

Up more than 212% since Seeking Alpha selected Super Micro Computer (NASDAQ:SMCI) as its Alpha Pick on Nov. 15, 2022, the stock has taken the bulls by its horns.

Amid market volatility and aggressive fluctuations in the technology sector, SMCI has reigned superior, being added to the S&P Midcap 400 Index with continued bullish momentum and tremendous investment characteristics.

Super Micro Computer, Inc. (SMCI)

  • Market Capitalization: $18.23B.

  • Quant Rating: Hold.

  • Quant Sector Ranking (as of 8/9/23): 92 out of 582.

  • Quant Industry Ranking (as of 8/9/23): 5 out of 28.

Offering meticulous designs for server and storage solutions, SMCI manufactures first-to-market optimized applications for businesses that help reduce costs and environmental impacts while delivering differentiated systems to meet customer demands. With strong semiconductor manufacturing relationships (one of my favorite tech industries), SMCI is focused on digital transformation while making transformations at the infrastructure level.

According to SA News, both Bearish and Bullish analysts are lifting estimates.

We believe the stock fell due to a combination of the high run-up in share price, thus extending valuation premiums, extremely high expectations, and management alluding to potential supply chain bottlenecks.

Although revenue guidance was only at the midpoint of expectations, there was still a lot to like in the quarter's earnings. Specifically, CEO Charles Liang mentioned, "in the next four quarters, I believe we will continue to grow revenue quarter after quarter." Management also noted that gross margins are expected to be stable even while increasing revenue.

Overall, we still think SMCI can continue its strong growth, bolstered by the growing demand for AI in software, storage, cloud, and services businesses. While today's drop hurt the overall Alpha Picks portfolio, we are not sending a sell signal and will continue to hold the name. We will continue to keep subscribers updated as our models digest the results and ratings are updated.

Source: seekingalpha

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