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Super Micro Computer Inc Shows Mixed Fundamentals

Super Micro Computer Inc (SMCI) earns a 63% rating from a renowned investment strategy, highlighting some strengths and weaknesses. While some metrics are performing well, concern over return on equity and free cash flow could impact investor sentiment.

Date: 
AI Rating:   5

Investor Analysis of Super Micro Computer Inc

Super Micro Computer Inc (SMCI) has received a rating of 63% based on the Patient Investor model inspired by Warren Buffett. This rating suggests a level of interest, but not enough to classify the stock as a strong buy since ratings above 80% indicate more favorable conditions.

The report outlines various fundamental metrics impacting the overall evaluation:

  • Earnings Predictability: The stock passes this criterion, suggesting it has consistent earnings which could lead to investor confidence. Rating: 7.
  • Debt Service: Also passing indicates the company is likely managing its debts well, giving it a positive outlook in terms of financial stability. Rating: 7.
  • Return on Equity: This metric fails, signaling potential inefficiency in generating profit from shareholders' equity, which can deter investors. Rating: 4.
  • Return on Total Capital: The failure in this aspect raises concerns about overall capital management. Rating: 4.
  • Free Cash Flow: Another failure here is significant as it suggests the company may struggle with liquidity or investing back into its operations. Rating: 4.
  • Use of Retained Earnings: A pass here shows that the company is effectively using its retained earnings for growth, which is a positive sign. Rating: 7.
  • Share Repurchase: Rated neutral, indicating no strong indication towards buying back shares or expanding, it reflects mixed sentiment. Rating: 5.
  • Initial Rate of Return: The pass suggests that initial returns on investments are favorable, supporting a positive outlook. Rating: 7.
  • Expected Return: Another pass shows investor expectations are currently met, which can encourage current holders to stay. Rating: 7.
The ratings from these fundamentals combined paint a mixed picture. While SMCI shows certain favorable traits, the failures in return metrics and free cash flow could deter potential investors, thereby influencing stock price negatively.
Stocks:  SMCI