The past six months have been a windfall for Super Micro’s shareholders. The company’s stock price has jumped 49.9%, hitting $50.08 per share. This performance may have investors wondering how to approach the situation.
Is it too late to buy SMCI? Find out in our full research report, it’s free.
Why Is SMCI a Good Business?
Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ: SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Super Micro grew its sales at an incredible 45.6% compounded annual growth rate. Its growth beat the average business services company and shows its offerings resonate with customers. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Super Micro’s EPS grew at an astounding 23.2% compounded annual growth rate over the last five years. This performance was better than most business services businesses.
3. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Super Micro’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we're bullish on Super Micro, and with the recent rally, the stock trades at 16.2× forward P/E (or $50.08 per share). Is now the time to buy despite the apparent froth? See for yourself in our comprehensive research report, it’s free.
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