Micron Technology Inc. (MU - Analyst Report) is set to report second-quarter fiscal 2014 results on Apr 3, 2014. Last quarter, the company recorded 79.07% positive surprise. The company has delivered positive earnings surprises in two of the last four quarters with an average beat of 20.93%. Let’s see how things are shaping up for this announcement.
Factors this Past Quarter
Micron is benefiting from the growing demand for SSD products and has made significant investments to launch innovative SSD products to meet pent up demand.
Moreover, Micron has been constantly innovating in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, which are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.
Additionally, we believe that the acquisitions of Rexchip and Elpida will help boost its share in the memory market. The acquisition of Elpida also brought Apple Inc. (AAPL - Analyst Report) onto the customer roster, which is a positive for future growth.
However, competition from the likes of SanDisk (SNDK - Analyst Report), SK Hynix and Fusion-io remain concerns.
Our proven model does not conclusively show that Micron is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Zacks ESP stands at -8.33%. The Most Accurate estimate stands at 55 cents while the Zacks Consensus Estimate stands at 60 cents.
Zacks Rank: Micron’s Zacks Rank #3 (Hold) when combined with a -8.33% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Another company that you may want to consider as our model shows that it has the right combination of elements to post an earnings beat is:
Alcoa Inc. (AA - Analyst Report), Earnings ESP of +25.0 % and a Zacks Rank #3.