Super Micro Computer (SMCI, Financial) stock is experiencing a significant downturn today, plummeting by 26.37% following the announcement of a delay in filing its annual 10-K report with the Securities and Exchange Commission (SEC) for the fiscal year ended June 30. The stock is now trading at $403.23.
The abrupt drop comes in the wake of Hindenburg Research's critical short report, which accused Super Micro Computer of poor accounting practices. Shortly after, Supermicro announced it would postpone its financial filing to "complete its assessment of the design and operating effectiveness of its internal controls over financial reporting." This news has spurred substantial sell-offs, although SMCI shares are still up 44.21% year-to-date, with a stock split scheduled for October 1.
Despite the uncertainty surrounding the delayed 10-K report, Supermicro affirmed that its previously published quarterly and full-year results on August 6 remain unchanged. However, the market's sharp reaction can be attributed to the timing of this delay coinciding with Hindenburg's critical report.
From a valuation standpoint, SMCI has a price-earnings (PE) ratio of 20.24, a price-to-book (PB) ratio of 4.32, and a trailing twelve months (TTM) earnings per share (EPS) of 19.92. The GF Value of the stock is estimated at $220.89, making the stock significantly overvalued at its current price.
Moreover, Supermicro has shown strong financial strength with an Altman Z-Score of 7.41, indicating low bankruptcy risk. The company’s operating margins are expanding, currently at 8.47%, which is a positive sign for profitability.
However, there are several warning signs. The Beneish M-Score suggests potential financial manipulation, and the Sloan Ratio indicates poor earnings quality. Additionally, the company is facing increasing debt levels, with long-term debt growth of 1,374.3% over the past year.
Looking forward, Supermicro's strong revenue growth of 95% year-over-year and EBITDA growth of 49.8% show robust operational performance. Despite the current dip, the company's fundamentals suggest resilience, although investors should be cautious of the financial reporting concerns highlighted by Hindenburg Research.
While Super Micro Computer (SMCI, Financial) has strong growth and profitability metrics, the recent financial irregularities and stock volatility warrant a careful and more detailed analysis before making any investment decisions.
