We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Solid DRAM Demand & Pricing to Drive Micron (MU) Q2 Earnings
Read MoreHide Full Article
Micron Technology Inc. (MU - Free Report) is set to report second-quarter fiscal 2018 results on Mar 22. The question lingering in investors’ minds is whether this memory chip maker will be able to continue its upbeat performance in the quarter or not.
Notably, Micron has delivered positive earnings surprises for nine straight quarters. Over the trailing four quarters, the company delivered an average positive surprise of 10.2%. So, let’s see how things are shaping up prior to this announcement.
What the Zacks Model Unveils?
Our proven model conclusively shows that Micron is likely to beat earnings estimates this quarter. Per our model, a stock with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold), has higher chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for the fiscal second-quarter’s earnings is pegged at $2.76, which is 206.7% higher than the year-ago quarter’s earnings of 90 cents. Additionally, analysts polled by Zacks project revenues of roughly $7.23 billion, up 55.5% from the prior-year quarter tally.
Let’s see what’s driving this overwhelming expectation.
Higher Demand & Pricing for DRAM to Drive Revenues
The main reason behind the optimism surrounding the stock is improved prices for DRAM. Increased pricing is mainly driven by better product-mix optimization, and higher-than-anticipated demand for PCs, servers and mobiles.
Notably, DRAM generates majority of the company’s revenues, and in first-quarter fiscal 2018 it contributed approximately 67%. The company witnessed a year-over-year surge of a whopping 88% in DRAM revenues in the last reported quarter.
Smartphone makers and cloud data-center operators will be the key growth drivers for DRAM chips. As per data compiled by DRAMeXchange, smartphones witnessed an increase of 33.4% in DRAM content in 2017, to an average of 3.2 GB per device. As smartphone original equipment manufacturers (OEMs) plan to roll out devices with higher capacity, and more demanding applications like AR and AI, demand for DRAM is likely to grow much faster.
Furthermore, server DRAM demand is anticipated to remain strong as cloud data-center customers seek innovative solutions to reduce workload. The high-density modules based on advanced manufacturing nodes have come to the market, urging server OEMs to overhaul and shift to new technology for better results. This is likely to drive Micron’s top- and bottom-line results in the to-be-reported quarter.
NAND Revenue Growth to Moderate
Last fiscal, the company witnessed impressive growth in NAND revenues due to the huge demand-supply gap which hugely escalated chip prices. However, we expect the segment’s growth rate to be moderate this quarter as the supply-demand gap has narrowed down significantly, according to various research firms, which is affecting the chip prices adversely.
Notably, in the fiscal first quarter, Micron witnessed a mid-single-digit rise in bit shipments, while average selling price (ASP) declined in the low-single-digit range. Therefore, looking at the current scenario, we believe decline in ASP will negatively impact the company’s NAND revenues and margins, and somewhat offset the benefits from improved demand and prices for DRAM products.
Some Other Favorable Combinations
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Red Hat, Inc. has an Earnings ESP of +2.24% and a Zacks Rank of 3.
Paychex Inc. (PAYX - Free Report) has an Earnings ESP of +0.59% and a Zacks Rank of 3.
Accenture Plc (ACN - Free Report) has an Earnings ESP of +0.03% and a Zacks Rank of 3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Solid DRAM Demand & Pricing to Drive Micron (MU) Q2 Earnings
Micron Technology Inc. (MU - Free Report) is set to report second-quarter fiscal 2018 results on Mar 22. The question lingering in investors’ minds is whether this memory chip maker will be able to continue its upbeat performance in the quarter or not.
Notably, Micron has delivered positive earnings surprises for nine straight quarters. Over the trailing four quarters, the company delivered an average positive surprise of 10.2%. So, let’s see how things are shaping up prior to this announcement.
What the Zacks Model Unveils?
Our proven model conclusively shows that Micron is likely to beat earnings estimates this quarter. Per our model, a stock with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold), has higher chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Micron currently carries a Zacks Rank #2 and has an Earnings ESP of +1.26%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the fiscal second-quarter’s earnings is pegged at $2.76, which is 206.7% higher than the year-ago quarter’s earnings of 90 cents. Additionally, analysts polled by Zacks project revenues of roughly $7.23 billion, up 55.5% from the prior-year quarter tally.
Micron Technology, Inc. Price and EPS Surprise
Micron Technology, Inc. Price and EPS Surprise | Micron Technology, Inc. Quote
Let’s see what’s driving this overwhelming expectation.
Higher Demand & Pricing for DRAM to Drive Revenues
The main reason behind the optimism surrounding the stock is improved prices for DRAM. Increased pricing is mainly driven by better product-mix optimization, and higher-than-anticipated demand for PCs, servers and mobiles.
Notably, DRAM generates majority of the company’s revenues, and in first-quarter fiscal 2018 it contributed approximately 67%. The company witnessed a year-over-year surge of a whopping 88% in DRAM revenues in the last reported quarter.
Smartphone makers and cloud data-center operators will be the key growth drivers for DRAM chips. As per data compiled by DRAMeXchange, smartphones witnessed an increase of 33.4% in DRAM content in 2017, to an average of 3.2 GB per device. As smartphone original equipment manufacturers (OEMs) plan to roll out devices with higher capacity, and more demanding applications like AR and AI, demand for DRAM is likely to grow much faster.
Furthermore, server DRAM demand is anticipated to remain strong as cloud data-center customers seek innovative solutions to reduce workload. The high-density modules based on advanced manufacturing nodes have come to the market, urging server OEMs to overhaul and shift to new technology for better results. This is likely to drive Micron’s top- and bottom-line results in the to-be-reported quarter.
NAND Revenue Growth to Moderate
Last fiscal, the company witnessed impressive growth in NAND revenues due to the huge demand-supply gap which hugely escalated chip prices. However, we expect the segment’s growth rate to be moderate this quarter as the supply-demand gap has narrowed down significantly, according to various research firms, which is affecting the chip prices adversely.
Notably, in the fiscal first quarter, Micron witnessed a mid-single-digit rise in bit shipments, while average selling price (ASP) declined in the low-single-digit range. Therefore, looking at the current scenario, we believe decline in ASP will negatively impact the company’s NAND revenues and margins, and somewhat offset the benefits from improved demand and prices for DRAM products.
Some Other Favorable Combinations
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Red Hat, Inc. has an Earnings ESP of +2.24% and a Zacks Rank of 3.
Paychex Inc. (PAYX - Free Report) has an Earnings ESP of +0.59% and a Zacks Rank of 3.
Accenture Plc (ACN - Free Report) has an Earnings ESP of +0.03% and a Zacks Rank of 3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>