Why Super Micro Computer Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Super Micro Computer (NASDAQ: SMCI  ) popped as much as 15% after the server technology specialist's fiscal fourth quarter earnings beat analysts' expectations.

So what: For the quarter, Super Micro's net sales grew 16.8% year-over-year to a record $322.3 million in spite of continued wider industry weakness in Europe, while quarterly GAAP net income rose an even more impressive 52.9% year over year to $8.4 million, or $0.19 per diluted share. Excluding a $2.7 million pre-tax expense for stock-based compensation, however, non-GAAP net income rose to $0.26 per share.

Now what: Going forward, the company expects net sales in the range of $295 million to $315 million for the first quarter of fiscal 2014, with non-GAAP earnings per share ranging from $0.17 to $0.23.

After noting the company once again outpaced the broader industry's growth rate, CEO Charles Liang stated, "We start a new fiscal year with the strongest product lines in our history and with our global operations ready for growth. We believe that with this strong foundation we will continue our growth trend in fiscal 2014."

Though shares of Super Micro are trading hands at nearly 32 times last year's earnings, that premium may well be deserved, as the relatively small company appears to be firing on all cylinders going into its new fiscal year. Though shares are currently up nearly 30% year to date, there's no reason they can't continue to rise if the company can manage keep up this kind of earnings growth down the road.

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9/30/2016 4:00 PM
SMCI $23.37 Up +0.13 +0.56%
Super Micro Comput… CAPS Rating: **