Samsung Electronics and SK Hynix stocks have corrected, prompting securities analysts to cite historically low price-to-earnings ratios as evidence of undervaluation. Samsung's 12-month forward PER stands at 4.41x and SK Hynix at 4.69x, both significantly below their 10-year averages of 11.84x and 7.28x respectively. Despite these low PER readings, most analysts calculating target prices for memory chipmakers continue to rely on price-to-book ratio (PBR) rather than PER, reflecting uncertainty about whether current profitability levels can be sustained in the cyclical memory semiconductor industry. According to data provider FnGuide, 18 out of 24 securities firms that issued SK Hynix target prices in the recent three months used PBR-based methodologies.
Samsung Electronics 12-Month Forward PER Reaches 10-Year Low Distribution
According to securities information provider FnGuide, Samsung Electronics' 12-month forward PER consensus stood at 4.41x and SK Hynix at 4.69x based on closing prices. Over the prior 10 years, Samsung's 12-month forward PER averaged 11.84x with a standard deviation of 3.86. The current forward PER corresponds to the bottom 2.719 percentile of the 10-year distribution. SK Hynix's 10-year average 12-month forward PER was 7.28x, substantially higher than current levels. The KOSPI index's 12-month forward PER reached 5.78x, roughly half its 10-year average of 10.36x. Bloomberg noted that Korea's stock market was trading at its cheapest level on record, with forward PER lower than during the 2008 global financial crisis.
Securities Firms Favor PBR Over PER for SK Hynix Valuation
LS Securities researcher Hwang San-hae noted that low PER cannot be interpreted as a buy signal for semiconductor stocks, describing the current period as one where "the market verifies the sustainability of that profit level and pre-reflects supply expansion and resulting future margin erosion." Among 24 securities firms that presented SK Hynix target prices within the recent three months, 16 used only PBR. Hyundai Motor Securities calculated target prices using both PER and PBR, then averaged the results. Including LS Securities and Hyundai Motor Securities, 18 firms in total utilized PBR in their SK Hynix target price calculations. LS Securities analyst Jung Yu-seong applied different methodologies to different business segments: multiplying estimated net profit by target PER for high-bandwidth memory (HBM) operations, and multiplying net assets by target PBR for cyclical commodity memory operations. Experts point out that PER calculated from volatile earnings is unsuitable for enterprise valuation, as the metric fluctuates significantly with profit changes. Net assets, representing accumulated long-term earnings, remain relatively stable despite short-term industry fluctuations.
Analysts Cite AI Demand and Long-Term Contracts as Rationale for PER Adoption
Six securities firms—IBK Investment & Securities, Hanwha Investment & Securities, Eugene Investment & Securities, SK Securities, Hana Securities, and one other—used PER or similar metrics (EV/EBITDA) for SK Hynix target price calculations. SK Securities researcher Han Dong-hee, who began using PER for Samsung Electronics and SK Hynix target prices in the second half outlook, stated that "memory semiconductor companies' stock price peaks should be evaluated with PER" and that "the strength and duration of memory semiconductor price strength will exceed expectations." SK Securities analyzed that memory semiconductor demand volatility will decrease and duration will lengthen amid AI investment competition, noting that "memory semiconductors in advanced AI inference are a direct variable determining both AI performance improvement and cost efficiency." The expansion of long-term supply agreements (LTA) was cited as evidence of elevated memory semiconductor status. U.S. memory chipmaker Micron Technology disclosed in its fiscal 2026 third quarter (March-May) conference call that it had signed 16 strategic customer agreements (SCA), a more binding contract form than traditional LTAs that pre-determines volume and price bands for the contract period. Micron stated that volumes secured through contracts represent approximately 20% of DRAM production and approximately 30% of NAND flash production, projecting that over half of total revenue will fall under SCA contracts once currently negotiated agreements are finalized.
FAQ
What is Samsung Electronics' current 12-month forward PER?
Samsung Electronics' 12-month forward PER stands at 4.41x based on closing prices, representing the bottom 2.719 percentile of its 10-year distribution with a 10-year average of 11.84x.
Why do most analysts use PBR instead of PER to value SK Hynix?
Out of 24 securities firms issuing SK Hynix target prices in the recent three months, 18 used PBR-based methodologies because PER calculated from volatile earnings is considered unsuitable for valuing cyclical memory semiconductor businesses where sustained profitability remains uncertain.
What contract disclosure did Micron Technology make regarding long-term supply agreements?
Micron disclosed in its fiscal 2026 third quarter conference call that it signed 16 strategic customer agreements covering approximately 20% of DRAM production and approximately 30% of NAND flash production, with expectations that over half of total revenue will fall under such contracts once pending negotiations conclude.
