Super Micro Computer Inc Rates High With Patient Investor Model

Super Micro Computer Inc (SMCI) shines in a fundamental report, rating 63% in the Patient Investor model, highlighting predictable profitability and low debt, though it falls short on Return on Equity. Investors may view this as a cautiously optimistic sign for stock performance.

Date: 23-03-2025

AI Rating: 6

Investment Analysis of Super Micro Computer Inc
According to the report, Super Micro Computer Inc (SMCI) has received a rating of 63% based on its fundamentals. This rating, derived from 22 guru strategies, indicates that the company displays long-term, predictable profitability and low debt, aligning well with Warren Buffett's investment philosophy.

Earnings Predictability: SMCI has passed the earnings predictability test, which is a positive indicator for investors seeking stability in earnings. This suggests that the company demonstrates consistent earnings over time, making it a reliable investment choice.

Debt Service: The company has also passed the debt service test, meaning it likely has manageable levels of debt in relation to its earnings. Low debt is viewed favorably as it lowers financial risk.

Return on Equity: Unfortunately, SMCI failed the Return on Equity (ROE) test. A low ROE may indicate inefficiencies in generating profits from shareholders' equity, which could lead investors to view the company less favorably. This factor may contribute to a lack of confidence among potential investors, affecting stock demand.

Free Cash Flow: The company also failed the free cash flow metric, signifying potential concerns regarding its ability to generate cash after accounting for capital expenditures. A deficit in FCF can hinder growth opportunities and could be a red flag for future financial health.

Overall Ratings: While SMCI has strong points such as earnings predictability and debt management, the failures in ROE and free cash flow suggest caution. The overall positive rating of 63%, although decent, indicates that investors should monitor the company's performance closely before making investment decisions.

Stocks: SMCI