Khac Phu Nguyen
1 min read
This article first appeared on GuruFocus.
Super Micro Computer (NASDAQ:SMCI) shares fell 2.01% to $28.02 as of 11:05 a.m. ET in regular trading on November 10, as AI hardware names cooled after a hotter-than-expected October CPI report. The server maker issued no company-specific news today.
The latest numbers explain the market’s caution. Fiscal first-quarter revenue reached $19.9 billion, nearly four times the $5.0 billion of a year earlier, and diluted EPS rose to $1.75. Operating cash flow was negative $434 million, as receivables and inventory absorbed about $6 billion, partly offset by customer deposits. Gross margin fell to 12.7% from 17.5% in the prior quarter. Export controls also remain sensitive: a former contractor pleaded guilty in October in a case that also charged a company co-founder, who has pleaded not guilty.
The roughly $6 billion tied up in working capital equals about 30% of quarterly revenue, which is why fast growth is not yet producing cash. GuruFocus gives Super Micro a GF Score of 86/100, with Profitability 8/10, Momentum 8/10 and Financial Strength 7/10, but GF Value Rank only 2/10. The shares sit 70.67% below the $95.52 GF Value at a P/E of 5.87, yet GuruFocus flags “Possible Value Trap, Think Twice.” A low multiple alone is not a bargain. Positive operating cash flow next quarter is the test that matters.
