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just over the last week and leading up
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into their earnings super micro
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computers was up around 59% we even had
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analyst upgrade this company one in fact
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believe this is now a $48 stock but also
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remember they did have some issues just
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over the last few months possibly facing
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a removal from the NASDAQ listing we
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also saw Hindenberg take a short
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position in the company and in fact
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following this the company was down 19%
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incredibly volatile and then we got the
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issues where the auditor did resign only
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further plummeting this company by 33%
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now yesterday we did get to see their
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earnings as you can see something we
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reported on their revenue came in around
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5.6 to 5.7 billion lower than what the
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market wanted at 5.89 the earnings per
00:00:47
share around 58 to 60 as we can see the
00:00:51
market wanted higher but it doesn't just
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stop there for the Q3 of 2025 their
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guidance is around 5 to 6 billion a lot
00:00:59
lower than Market expectation and the
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same quite drastically to be said for
00:01:03
the earnings per share and then they
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gave their four-year guidance for FY
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2025 where it didn't look any better
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between 23.5 to 25 billion as we can see
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analysts were expecting in the 26 to 30
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billion region on top of that in the
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after hours for super micro it was
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incredibly volatile it was down around
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16% and then it recovered and was up 4%
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now if we delve a little bit deeper into
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what they actually reported well one
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thing they did mention is that they are
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very confident that they will be able to
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meet the SE deadline and they see for FY
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26 around 40 billion which did help some
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of the ease of the issues that we did
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mention in terms of cutting their
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guidance and we can see this optimistic
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commentary for 2026 overshadowed the
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issues that they have been facing in
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2025 as well as those previous that we
00:01:53
mentioned at the beginning of the
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episode now the CEO has said he is
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confident that the company will file its
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delayed annual report by February 25th
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and that the company also expects hit 40
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billion in revenue for FY 26 which is
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significantly higher than the expected
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30 billion so that is positive but we
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also want to bring you back to 2025 and
00:02:13
look at this current year where the
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company has massively slashed their
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guidance for the full year of 2025 and
00:02:19
as we mentioned from the previous post
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it isn't looking good in relation to
00:02:23
what the market wanted yet as we did
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highlight the company did rebound and
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clearly Wall Street are buying in that
00:02:30
FY 2026 numbers can be achieved another
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point that investors are looking to and
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I guess you could say are happy is that
00:02:37
super micro have said they are working
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diligently to meet the deadlines not
00:02:41
only for their delayed fy2 24 accounts
00:02:44
but also for
00:02:45
fy22 and we're talking about both the
00:02:48
first and second quarter reports now as
00:02:50
we can see it has gained a bit more
00:02:52
momentum in the pre-market today up
00:02:54
around 7% currently trading at around
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$41 but over the last year this is a
00:02:59
company that has been hammered down 50%
00:03:02
yet if you have been someone who has
00:03:04
been holding this company for over the
00:03:06
last 10 years yes you would be happy the
00:03:08
company has massively out formed the S&P
00:03:10
up
00:03:11
987 but just take a look at its peak
00:03:14
this company was trading at around
00:03:16
$123 that is a massive drop to where
00:03:19
it's sitting at now still trading in the
00:03:21
lower end of the 52 we range in terms of
00:03:24
analyst Seeking Alpha are the only ones
00:03:26
to consider this company a bu and when
00:03:28
we do take a look at their historical
00:03:29
performance we can see they have missed
00:03:31
in the most recent quarter they have a
00:03:33
75% track record but again remember the
00:03:36
issues that were flaged we have
00:03:38
highlighted prior is all around the
00:03:40
accounting numbers whether you can have
00:03:42
confidence that what they have stated is
00:03:44
true don't forget we did see eron young
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resign as Auditors and this was one of
00:03:48
the key reasons having said that we can
00:03:50
see over the next four quarters where
00:03:52
this company expects to go three of them
00:03:54
in terms of growth and based on June
00:03:57
2025 this is a company that does trade
00:03:59
at a very low forward PE of just below
00:04:02
14 because when we compare it to the
00:04:04
sector median of around 26 it is trading
00:04:07
at a 40% discount although when we
00:04:09
compare it to their own 5year average it
00:04:11
isn't that far off yet we do see an A
00:04:14
minus on the valuation grade because no
00:04:16
matter what metric you do take a look at
00:04:18
this is a company that trades at a
00:04:20
massive discount to the overall sector
00:04:23
remember the question that we need to
00:04:24
ask and be answered is this a company
00:04:26
that deserves the discount or in fact
00:04:28
are Wall Street missing a step and we
00:04:30
should consider this a great buying
00:04:32
opportunity growth grade comes in adding
00:04:34
a minus year on-ear 110% growth
00:04:37
significantly above the sector
00:04:39
significantly above their 5year average
00:04:41
forward looking 61% again the same to be
00:04:44
said significantly higher than the 6 and
00:04:46
26% respectively of the comparables and
00:04:49
if you do look at the earnings per share
00:04:51
this company expects to achieve 38% year
00:04:54
on year over the next 3 or five and that
00:04:56
is higher than the 15 and 28% of the two
00:04:59
again respective comparables in terms of
00:05:01
profitability this is one area that gets
00:05:03
a poor rating at a we noticed gross
00:05:06
margin 14% while significantly lower
00:05:09
than the sector it does come in only a
00:05:11
little bit lower than their 5year point
00:05:13
yet their bottom line of 8% does
00:05:15
actually outperform both sector at four
00:05:17
and 5year at 5.5 one thing though that
00:05:20
is very important to understand based on
00:05:22
the trading spot month this company has
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been burning through cash netive -2.5
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billion cash from operations the sector
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104 million and actually they have been
00:05:32
burning cash for quite some time given
00:05:34
their 5year average but it has been at a
00:05:36
much lower rate at
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292 million now for those that just want
00:05:40
a bit more detail about the company the
00:05:42
underlining metrics we do notice the
00:05:45
free cash flow very inconsistent
00:05:47
although factor in this is a cyclical
00:05:48
industry in terms of the sales growth it
00:05:50
does look good especially the most
00:05:52
recent years 20124 110% will be
00:05:56
interesting to see their full year 25
00:05:58
and whether or not they can achieve
00:05:59
achieve the 2026 stated figure which
00:06:02
Wall Street clearly do like to note and
00:06:04
total sales has gone from 2 billion 10
00:06:06
years ago to now sitting at 15 now we
00:06:09
will highlight they have diluted your
00:06:10
position as a shareholder over the last
00:06:12
10 years but one thing we would say if a
00:06:14
company can outform the SNP share
00:06:17
dilution isn't probably going to be a
00:06:19
very large worry roic 10% or more they
00:06:22
managed to execute that pretty much
00:06:24
every single year 177% in 2024 looking
00:06:27
very healthy and we noticed on both op
00:06:29
ating side as well as free cash flow the
00:06:31
constant volatility and inconsistency on
00:06:34
a year-on-year basis having said all of
00:06:37
that the net Deb to ebit D does look
00:06:39
very strong remember this correlates to
00:06:40
the balance sheet strength and these are
00:06:42
the number of years it would take the
00:06:43
company to pay off all of their debt net
00:06:45
of cash on hand 34 over the last 12
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months expected to go lower over the
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next 12 so that is a good sign on their
00:06:52
balance sheet we also want to highlight
00:06:54
institutional ownership at around 85% we
00:06:56
can see around 239 Million worth of Sal
00:06:59
over the last year but actually a
00:07:01
significant amount more buying at 2.8
00:07:04
billion and we also noticed in the most
00:07:06
recent quarter institutions were buying
00:07:08
Handover fist super micro computers
00:07:11
again as always bear in mind we are yet
00:07:13
to wait for the q1 data and as always do
00:07:16
your own due diligence never copy what
00:07:18
the institutions or even what the
00:07:20
Insiders do speaking of they have around
00:07:22
18% ownership around 30 million worth of
00:07:25
sales over the last year now there's
00:07:27
been no buying or selling in q1 in fact
00:07:29
would have to go to Q2 where there was
00:07:31
around 1 million and we'll show you for
00:07:33
full transparency but as we always say
00:07:35
this isn't a typical bearish signal they
00:07:37
sell for many reasons personal and
00:07:39
financial most recent in fact the
00:07:41
director on the 3rd of June selling
00:07:43
3,000 shares and probably what seems
00:07:45
like a long time ago at the $80 mark
00:07:48
negating them
00:07:49
241,000 now before we jump into our own
00:07:52
valuation we want to let you know we
00:07:53
have released our latest 3 weekly
00:07:55
article where we cover severely
00:07:57
undervalued stocks as well as what gone
00:07:59
in the market over the last few days so
00:08:01
click below you can sign up read
00:08:03
straight away where you'll be able to
00:08:05
gain access to 45 undervalued stocks for
00:08:08
the month of February lots of
00:08:09
information for each one the upside That
00:08:11
Wall Street themselves see over the next
00:08:13
year and you can grab a copy of 43
00:08:16
stocks that Wall Street themselves
00:08:18
believe have the most upside right now
00:08:20
in the S&P and we're also going to be
00:08:22
dropping a new copy of the spreadsheet
00:08:24
in the next few days so click below sign
00:08:26
up and you can read straight away now
00:08:29
jump into the valuation our intrinsic
00:08:31
value compromise of $44 is derived from
00:08:34
the DCF model now we'll show you where
00:08:36
the figures come from we have the free
00:08:37
cash flow year- on-year average growth
00:08:40
as we say will be skewed for companies
00:08:41
that go from negative to positive a
00:08:43
number of years but we've gone 12%
00:08:45
moving forwards which you could argue
00:08:47
given all the data if they can execute
00:08:49
and there is volatility to the numbers
00:08:51
then this could be very conservative and
00:08:53
with the discount rate we then get the
00:08:55
present value of future free cash flows
00:08:56
and terminal value add together with the
00:08:58
cash subtract to toal debt get to the
00:09:00
equity value divide by the shares
00:09:01
outstanding and as you see $44 which
00:09:04
would indicate right now 9% upside be in
00:09:07
mind these numbers are subjective you
00:09:09
can grab a copy of this model by
00:09:11
clicking on the pin comment below Runing
00:09:13
through your own numbers whether it's
00:09:14
for smci or any others but full
00:09:16
transparency will show you at the 10%
00:09:18
rate around $39 indicating downside of
00:09:20
4% and at the 14% rate you would be able
00:09:23
to see $50 Mark which is 24% upside now
00:09:26
we'll take the 12% in the medium rate to
00:09:28
the final where we aren't just done yet
00:09:30
as we always like to add a margin of
00:09:32
safety using 10% executing on that if it
00:09:35
meets our three golden criteria wide Mo
00:09:38
strong financial metrics good
00:09:39
forward-looking data and that is where
00:09:41
we see this company right now around
00:09:42
that 10% point will Street themselves
00:09:45
their price Target is $42 by the end of
00:09:47
the year that translates to only 5%
00:09:50
upside now for those that are interested
00:09:51
at the 15% Mark a bu at 37 at 20% around
00:09:55
35 but right now as we say 10% MOS 5%
00:09:59
upside from Wall Street give us your
00:10:01
thoughts have you got a bit more
00:10:02
confidence in this company after the
00:10:04
issues that we have seen over the last
00:10:06
few months maybe this is one you're not
00:10:08
going to touch or maybe this is one in
00:10:09
fact you were buying not too long ago
00:10:11
when it was in the low 20s or in fact in
00:10:13
the High Teens give us your thoughts and
00:10:15
don't forget to sign up to the free
00:10:16
Weekly Newsletter grab those
00:10:18
spreadsheets come and join us in the
00:10:19
patreon as well where we do cover our
00:10:21
weekly buys and sells we have been
00:10:23
buying and selling given the volatility
00:10:25
over the last few weeks and as always
00:10:26
have a great day we'll see you all on
00:10:28
the next one
