NASDAQ:SMCI appears to be flying under the radar despite its strong fundamentals.

Our stock screener has spotted SUPER MICRO COMPUTER INC (NASDAQ:SMCI) as an undervalued stock with solid fundamentals. NASDAQ:SMCI shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Evaluating Valuation: NASDAQ:SMCI

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:SMCI, the assigned 8 reflects its valuation:

• A Price/Earnings ratio of 4.46 indicates a rather cheap valuation of SMCI.
• Based on the Price/Earnings ratio, SMCI is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.
• SMCI's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 31.10.
• The Price/Forward Earnings ratio is 1.29, which indicates a rather cheap valuation of SMCI.
• 100.00% of the companies in the same industry are more expensive than SMCI, based on the Price/Forward Earnings ratio.
• The average S&P500 Price/Forward Earnings ratio is at 22.54. SMCI is valued rather cheaply when compared to this.
• Based on the Enterprise Value to EBITDA ratio, SMCI is valued a bit cheaper than 62.50% of the companies in the same industry.
• SMCI's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The decent profitability rating of SMCI may justify a higher PE ratio.
• SMCI's earnings are expected to grow with 70.61% in the coming years. This may justify a more expensive valuation.

A Closer Look at Profitability for NASDAQ:SMCI

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:SMCI, the assigned 7 is noteworthy for profitability:

• SMCI's Return On Assets of 11.84% is amongst the best of the industry. SMCI outperforms 84.38% of its industry peers.
• Looking at the Return On Equity, with a value of 20.59%, SMCI belongs to the top of the industry, outperforming 84.38% of the companies in the same industry.
• SMCI's Return On Invested Capital of 14.50% is fine compared to the rest of the industry. SMCI outperforms 78.13% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for SMCI 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.
• The Profit Margin of SMCI (8.88%) is better than 84.38% of its industry peers.
• In the last couple of years the Profit Margin of SMCI has grown nicely.
• SMCI's Operating Margin of 9.72% is amongst the best of the industry. SMCI outperforms 81.25% of its industry peers.
• SMCI's Operating Margin has improved in the last couple of years.

Health Analysis for NASDAQ:SMCI

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:SMCI has achieved a 6 out of 10:

• SMCI has an Altman-Z score of 7.27. This indicates that SMCI is financially healthy and has little risk of bankruptcy at the moment.
• SMCI's Altman-Z score of 7.27 is amongst the best of the industry. SMCI outperforms 87.50% 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.
• The Current ratio of SMCI (4.69) is better than 84.38% of its industry peers.
• A Quick Ratio of 2.29 indicates that SMCI has no problem at all paying its short term obligations.
• SMCI has a better Quick ratio (2.29) than 75.00% of its industry peers.

Analyzing Growth Metrics

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NASDAQ:SMCI, the assigned 8 reflects its growth potential:

• SMCI shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 43.24% yearly.
• The Revenue has grown by 109.77% in the past year. This is a very strong growth!
• Measured over the past years, SMCI shows a very strong growth in Revenue. The Revenue has been growing by 33.68% on average per year.
• The Earnings Per Share is expected to grow by 70.61% on average over the next years. This is a very strong growth
• The Revenue is expected to grow by 9.60% on average over the next years. This is quite good.
• 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.

More Decent Value stocks can be found in our Decent Value screener.

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

Disclaimer

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.