2024-05-08 22:06:08 ET
Summary
- Super Micro Computer Inc.'s latest financials show strong growth in net sales, but the company's business model is struggling to maintain peak gross margins.
- Despite this, Super Micro is experiencing accelerating revenue and earnings growth, and is well-positioned in the growing edge computing market.
- The company's valuation is currently high, suggesting that much of the future growth is already priced in, raising questions about sustainability.
- I'd like to take another look at SMCI in the next quarter or when/if the stock price falls by 20-25%; until then I will not raise my rating to "Buy" from today's "Hold".
Introduction
After I first published my bullish call on Super Micro Computer, Inc. ( SMCI ) in January 2024, the stock more than doubled within a few weeks, leading me to assume that this rally could not be sustainable - hence my downgrade in February . SMCI became the strongest stock in Q1 2024, so I included it in the review of the article " The Top 3 S&P 500 Stocks Of Q1 2024 ", in which I confirmed my February assessment: SMCI's business is growing fast, but I still had doubts that current margins could be sustainable....
Read the full article on Seeking Alpha
For further details see:
Super Micro Computer: Sustainability In Question