Why NASDAQ:SMCI Is a Promising High-Growth Stock in the Midst of Consolidation.

In this article, we'll take a closer look at SUPER MICRO COMPUTER INC (NASDAQ:SMCI) as a potential candidate for growth investing. While it's important for investors to conduct their own research, SUPER MICRO COMPUTER INC has piqued our interest by appearing on our strong growth and breakout radar. Let's explore further.

Assessing Growth for NASDAQ:SMCI

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NASDAQ:SMCI scores a 8 out of 10:

• Measured over the past years, SMCI shows a very strong growth in Earnings Per Share. The EPS has been growing by 43.24% on average per year.
• SMCI shows a strong growth in Revenue. In the last year, the Revenue has grown by 109.77%.
• The Revenue has been growing by 33.68% on average over the past years. This is a very strong growth!
• SMCI is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 70.61% yearly.
• SMCI is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.60% yearly.
• When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Assessing Health for NASDAQ:SMCI

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:SMCI, the assigned 6 reflects its health status:

• SMCI has an Altman-Z score of 7.43. This indicates that SMCI is financially healthy and has little risk of bankruptcy at the moment.
• The Altman-Z score of SMCI (7.43) is better than 90.63% of its industry peers.
• SMCI has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
• A Current Ratio of 4.69 indicates that SMCI has no problem at all paying its short term obligations.
• SMCI's Current ratio of 4.69 is amongst the best of the industry. SMCI outperforms 84.38% of its industry peers.
• SMCI has a Quick Ratio of 2.29. This indicates that SMCI is financially healthy and has no problem in meeting its short term obligations.
• The Quick ratio of SMCI (2.29) is better than 75.00% of its industry peers.

Profitability Assessment of NASDAQ:SMCI

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:SMCI has earned a 7 out of 10:

• Looking at the Return On Assets, with a value of 11.84%, SMCI belongs to the top of the industry, outperforming 84.38% of the companies in the same industry.
• SMCI has a better Return On Equity (20.59%) than 84.38% of its industry peers.
• SMCI has a better Return On Invested Capital (14.50%) than 78.13% of its industry peers.
• SMCI had an Average Return On Invested Capital over the past 3 years of 20.84%. This is above the industry average of 16.99%.
• The 3 year average ROIC (20.84%) for SMCI is well above the current ROIC(14.50%). The reason for the recent decline needs to be investigated.
• SMCI's Profit Margin of 8.88% is amongst the best of the industry. SMCI outperforms 84.38% of its industry peers.
• SMCI's Profit Margin has improved in the last couple of years.
• With an excellent Operating Margin value of 9.72%, SMCI belongs to the best of the industry, outperforming 81.25% of the companies in the same industry.
• In the last couple of years the Operating Margin of SMCI has grown nicely.

How do we evaluate the setup for NASDAQ:SMCI?

ChartMill also assign a Setup Rating to every stock. With this score it is determined to what extend the stock has been trading in a range in the recent days and weeks. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. NASDAQ:SMCI scores a 7 out of 10:

Although the technical rating is only medium, SMCI does present a nice setup opportunity. Prices have been consolidating lately and the volatility has been reduced. There is a resistance zone just above the current price starting at 47.81. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 41.72, a Stop Loss order could be placed below this zone.

More Strong Growth stocks can be found in our Strong Growth screener.

Check the latest full fundamental report of SMCI for a complete fundamental analysis.

For an up to date full technical analysis you can check the technical report of SMCI

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.