SMCI Stock Study (10-12-26)

Posted by Mark on October 6, 2026 at 06:44 | Last modified: October 12, 2026 11:28

I recently studied Super Micro Computer Inc (SMCI, $41.86). The previous stock study is here.

M* writes:

     > Super Micro Computer Inc provides high-performance server technology
     > services to cloud computing, data centers, high-performance computing,
     > and the Internet of Things embedded markets. Its solutions include
     > servers, storage systems, modular blade servers, workstations,
     > scale solutions, networking devices, server sub-systems,
     > and server management. These turn-key solutions are designed,
     > developed, validated, and installed for AI datacenters. The company
     > has one operating segment that develops and provides high-performance
     > server solutions based upon a, modular and open-standard architecture.
     > More than half of the firm’s revenue is generated in the United
     > States, with the rest coming from Europe, Asia, and other regions.

Over the past decade, this large-size company grows sales and earnings 33.7% and 52.5% per year, respectively (FY ends Jun 30). Lines are mostly up, straight, and parallel except for sales dip in ’20 and EPS dips in ’18 and ’25. Five-year earnings R^2 is 0.88 but VL gives an Earnings Predictability score of 45. Shares outstanding increase 34.9% (3.4%/year) and CFRA, who maintains a “sell” rating, says “we expect the decision to issue equity reflects a hesitancy from banks to offer debt capital to SMCI amid ongoing investigations, and… this financing headwind to persist given recent cash flow pressure.”

Over the past decade, PTPM trails peer and industry averages while increasing from 3.7% to 7.1% (’26) with a last-5-year mean of 7.6%. ROE leads peer and industry averages while increasing from 8.1% to 28.3% (’26) with a last-5-year mean of 24.4% (shareholder equity consistently positive and growing at a blistering 38.5% annualized pace). Debt-to-capital is less than peer and industry averages while ranging from 2.5% in ’19 to 43.1% in ’25 with a last-5-year mean of 30.5%.

Quick ratio is 1.91 and interest coverage 14.3 per M* who assigns no economic moat and a C grade for Financial Health (per BI website). VL gives a B+ grade for Financial Strength.

RightStock—a new tool on the BI website that I am tracking for informational purposes—gives a fitness score of 81 (“strong”) and opportunity score of 98 (“excellent”).

With regard to sales growth:

• YF gives YOY ACE 71.8% and 17.3% for ’27 and ’28 (based on 15 analysts).
• Zacks gives YOY ACE 71.5% and 17.6% for ’27 and ’28 (6 analysts).
• VL projects 20.4% per year from ’26-’30.
• CFRA projects 74.1% YOY and 16.3% per year for ’27 and ’26-’28, respectively.
• M* gives a 2-year ACE of 43.1% growth per year.

My 15.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 23.3% YOY and 17.7% per year for ’28 and ’27-’29 (based on 21 analysts).
• Nasdaq.com gives ACE 24.4% YOY for ’28 (7 and 5 analysts for ’27 and ’28, respectively).
• Seeking Alpha projects 4-year annualized growth of 20.6%.
• Argus projects 5-year annualized growth of 15.0%.
• Finviz gives 5-year annualized ACE of 18.3% (8).
• LSEG has LTG at 48.5%.
• YF gives ACE YOY 19.4% and 22.7% for ’27 and ’28, respectively (17).
• Zacks gives ACE YOY 20.3% and 17.3% for ’27 and ’28 along with 5-year annualized of 13.1% (7).
• VL projects 16.5% growth per year from ’26-’30.
• CFRA projects 15.4% YOY and 8.2% per year for ’27 and ’26-’28, respectively.

My 13.0% per year forecast is below the long-term-estimate range [mean of five excluding the apparent outlier: 16.7% (22.0% otherwise)]. Initial value is trendline $3.00/share rather than ’26 EPS of $3.26 (up 94% YOY).

My Forecast High P/E is 14.0. Over the past 10 years, high P/E ranges from 11.0 in ’22 to 31.3 in ’18 (excluding upside outliers 64.0 and 57.3 in ’24 and ’25, respectively) with a last-5-year mean of 17.9 and a last-5-year-mean average P/E of 12.7. I am near bottom of the range (only ’22 is less).

My Forecast Low P/E is 6.0. Over the past 10 years, low P/E falls from 14.4 to 6.0 (’26) with a last-5-year mean of 7.5. I am forecasting near bottom of the range (only 3.2 in ’23 is less).

My Low Stock Price Forecast (LSPF) of $18.00 is default based on initial value from above: 57.0% less than previous close and 7.7% less than the 52-week low.

These inputs land SMCI in the HOLD zone with a U/D ratio of 1.5. Total Annualized Return (TAR) is 13.1%.

PAR (using Forecast Average—not High—P/E) of 5.7% is less than I seek for a large-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 40 studies over the last 90 days (my study and 7 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 20.0%, 19.7%, 21.0, and 7.6, respectively. I am lower across the board. VL projects a future average P/E of 14.0 that is less than MS (14.3) and much greater than mine (10.0).

MS high / low EPS are $7.25 / $2.70 versus my $5.53 / $3.00 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $6.00 is in the middle (but based on four years rather than five like ours).

MS LSPF of $19.80 implies a Forecast Low P/E of 7.3: lower than the above-stated 7.6. MS LSPF is 3.5% less than the default $2.70/share * 7.6 = $20.52 resulting in more conservative zoning. MS LSPF is 10.0% greater than mine, though.

MOS is robust in the study because my inputs are less than most historical/analyst/MS estimates/ranges. Testifying to the MOS is MS TAR exceeding mine by 17.8% (unreasonably high, actually).

With regard to valuation, PEG is 0.73 and 0.90 per Zacks and my projected P/E: both undervalued (a rare finding). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 1.03 (mind my exclusions). “Quick and dirty” cash flow (excluding capex, which Google AI says is wrong) has stock undervalued by 53%. M* reports stock at 20% discount.

I am okay with an understated TAR (see two paragraphs above) because CFRA injects a high dose of reasonable doubt. This is due to an ongoing DOJ investigation into “export control violations” and future margin vulnerability to memory-price normalization. While these seem to be risks, VL is mostly undeterred.

Per U/D, SMCI is a BUY under $33/share. Given forecast high price ~$77, [77.4 / ((14.87 / 100 ) +1 ) ^ 5] ~ $38.50 meets the BetterInvesting® TAR criterion.

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