Super Micro Computer, Inc. (NASDAQ: SMCI)

Sector: Technology Industry: Computer Hardware CIK: 0001375365
Market Cap 17.67 Bn
P/B 2.71
P/E 22.29
P/S 0.84
ROIC (Qtr) 6.69
Div Yield % 0.00
Rev 1y % (Qtr) -15.49
Total Debt (Qtr) 4.78 Bn
Debt/Equity (Qtr) 0.73

About

Super Micro Computer, Inc., commonly known as Supermicro, operates in the data center and cloud computing industry, providing accelerated compute platforms that are optimized for high-performance and high-efficiency server and storage systems. Supermicro's business activities revolve around the design, development, and sale of a wide range of products and services, including server and storage systems, subsystems and accessories, software management solutions, and global services. The company's operations span across various markets, including enterprise...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 4.20B provide 41.71x coverage of short-term debt 100.62M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 14.39B provides 3.01x coverage of total debt 4.78B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 217.91M exceeds capital expenditure of 115.18M by 1.89x, indicating strong organic growth funding capability.
  • Tangible assets of 14.39B provide exceptional 13.99x coverage of deferred revenue 1.03B, showing strong service capability backing.
  • Tangible assets of 14.39B provide robust 14.88x coverage of other current liabilities 966.95M, indicating strong asset backing.

Bear case

  • Operating cash flow of 333.10M barely covers its investment activities of (171.18M), with a coverage ratio of -1.95, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (171.18M) provide weak support for R&D spending of 677.62M, which is -0.25x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 333.10M provides insufficient coverage of deferred revenue obligations of 1.03B, which is 0.32x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 333.10M shows concerning coverage of stock compensation expenses of 339.58M, with a 0.98 ratio indicating potential earnings quality issues.
  • Free cash flow of 217.91M represents just 0.09x of debt issuance 2.47B, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Computer Hardware
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ANET Arista Networks, Inc. 166.50 Bn 49.60 19.71 0.00 Bn
2 DELL Dell Technologies Inc. 87.77 Bn 16.46 0.84 31.24 Bn
3 WDC Western Digital Corp 61.67 Bn 24.25 5.14 4.68 Bn
4 STX Seagate Technology Holdings plc 59.67 Bn 34.84 6.24 4.99 Bn
5 SNDK Sandisk Corp 34.82 Bn -20.01 4.48 1.35 Bn
6 PSTG Pure Storage, Inc. 22.09 Bn 169.48 6.34 0.23 Bn
7 HPQ Hp Inc 21.69 Bn 8.58 0.39 9.67 Bn
8 SMCI Super Micro Computer, Inc. 17.67 Bn 22.29 0.84 4.78 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.18 2.06
EV to Cash from Ops. EV/CFO 51.14 -0.65
EV to Debt EV to Debt 3.57 56.37
EV to EBIT EV/EBIT 17.34 2.89
EV to EBITDA EV/EBITDA 17.19 -1.74
EV to Free Cash Flow [EV/FCF] EV/FCF 78.18 -7.44
EV to Market Cap EV to Market Cap 0.98 7.64
EV to Revenue EV/Rev 0.81 78.30
Price to Book Value [P/B] P/B 2.67 -28.73
Price to Earnings [P/E] P/E 22.01 6.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 1.25
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 12.30
Dividend per Basic Share Div per Share (Qtr) 0.00 0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 7.93
Interest Coverage Int. cover (Qtr) 14.63 -105.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 30.59 -11.38
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 100.93 867.36
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -41.40 -189.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -37.64 -40.76
EBIT Growth (1y) % EBIT 1y % (Qtr) -37.54 -117.00
EBT Growth (1y) % EBT 1y % (Qtr) -40.49 -116.68
EPS Growth (1y) % EPS 1y % (Qtr) -46.37 -70.06
FCF Growth (1y) % FCF 1y % (Qtr) 108.67 712.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -14.56 34.90
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.46 0.80
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.06
Cash Ratio Cash Ratio (Qtr) 1.79 7.26
Current Ratio Curr Ratio (Qtr) 5.39 13.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.73 -3.57
Interest Cover Ratio Int Coverage (Qtr) 14.63 -105.42
Times Interest Earned Times Interest Earned (Qtr) 14.63 -105.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.00 -629.92
EBIT Margin % EBIT Margin % (Qtr) 4.67 -683.67
EBT Margin % EBT Margin % (Qtr) 4.35 -687.58
Gross Margin % Gross Margin % (Qtr) 10.10 34.79
Net Profit Margin % Net Margin % (Qtr) 3.80 -692.43