Super Micro has gotten torched over the last six months - since October 2024, its stock price has dropped 22.1% to $32.11 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Following the drawdown, is now an opportune time to buy SMCI? Find out in our full research report, it’s free.
Why Are We Positive On Super Micro?
Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ: SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Super Micro’s sales grew at an incredible 44.8% compounded annual growth rate over the last five years. Its growth beat the average business services company and shows its offerings resonate with customers. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Super Micro’s EPS grew at an astounding 42.5% compounded annual growth rate over the last five years. This performance was better than most business services businesses.
3. New Investments Bear Fruit as ROIC Jumps
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Super Micro’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we're bullish on Super Micro. With the recent decline, the stock trades at 11.3× forward price-to-earnings (or $32.11 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Super Micro
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