A month has gone by since the last earnings report for Micron (MU - Free Report) . Shares have lost about 16% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Micron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Micron Q2 Earnings Beat Estimates, Provides Strong Q3 Guidance
Micron reported stellar results for second-quarter fiscal 2022, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate and marked solid year-over-year improvements as well.
The company’s fiscal second-quarter non-GAAP earnings per share (EPS) of $2.14 beat the Zacks Consensus Estimate of $1.95. In addition, non-GAAP earnings registered year-over-year growth of a whopping 118%. Quarterly revenues of $7.79 billion outpaced the consensus mark of $7.51 billion and increased about 25% from the year-ago quarter’s $6.24 billion.
Q2 Revenue Details
Dynamic random access memory revenues of $5.72 billion, accounting for 73% of the total revenues in the fiscal second quarter, jumped 29% year over year and 2% sequentially. Bit shipments increased in the high-single-digit percentage range sequentially, while the average selling price (ASP) decreased in the mid-single-digit percentage range on a quarter-over-quarter basis.
NAND revenues of $1.96 billion, representing 25% of the total top line, were up 19% on a year-over-year basis and increased 4% quarter over quarter. While NAND ASP increased in the mid-single-digit percentage band, bit shipments remained flat sequentially.
Segment-wise, revenues of $3.46 billion from the computing and networking business unit climbed 31% from the year-ago quarter and 2% sequentially. MU noted that revenues were mainly driven by the strong performance across the data center and graphics markets. Moreover, an improvement in client revenues led to the segment’s strong performance.
Revenues of $1.91 billion from the Mobile Business Unit climbed 4% on a year-over-year basis but declined 2% sequentially. The company noted that its Mobile Business Unit division continued to perform well, driven by its leadership in providing managed NAND and multi-chip packages and strong relationships with all smartphone makers.
Embedded Business Unit’s revenues logged in $1.3 billion, up 37% from the year-ago period and 5% from the previous quarter. The year-over-year growth was primarily aided by strong execution and solid demand across the automotive and industrial markets.
Revenues from the Storage Business Unit, comprising solid-state drive (“SSD”) NAND components, totaled $1.2 billion, up 38% year over year and 2% sequentially. This year-over-year growth was mainly supported by robust SSD demand from data center customers.
Margins
Micron’s non-GAAP gross profit of $3.72 billion surged 81% year over year and 3% sequentially. Non-GAAP gross margin of 48% reflects a strong improvement from the year-ago quarter’s 33% and 47% in the first quarter of fiscal 2022. The improvement in the gross margin reflects the benefits from a favorable product portfolio mix as MU ramped up several high-value solutions along with reductions in manufacturing costs.
Micron’s non-GAAP operating income of $2.75 billion soared 119% year over year and 0.9% sequentially. Non-GAAP operating margin improved to 35% from the year-earlier quarter’s 20%, primarily on a higher gross margin, partially offset by higher operating expenses as a percentage of revenues. Non-GAAP operating margin remained flat on a quarter-over-quarter basis.
Non-GAAP operating expenses came in at $974 million compared with the previous quarter’s $891 million and the year-ago quarter’s $797 million. As a percentage of revenues, operating expenses for the fiscal second quarter came in at 12.5% compared with the previous quarter’s 11.6% and the year-ago quarter’s 12.8%.
Balance Sheet and Cash Flow
Micron exited the reported quarter with cash and investments of $11.9 billion compared with $11.5 billion recorded at the end of the prior quarter. Furthermore, MU ended the quarter with total liquidity of $14.4 billion compared with $14 billion witnessed at the end of the first quarter of fiscal 2022.
Micron’s long-term debt as of Mar 2, 2022 was $6.90 billion compared with $6.69 billion witnessed at the end of the first quarter.
The company generated operating cash flow of $3.6 billion during the fiscal second quarter and free cash flow of $1.03 billion. It repurchased stocks worth $408 million and paid $112 million in dividends.
In the first half of fiscal 2022, Micron generated operating and free cash flows of $7.57 billion and $1.7 billion, respectively. During the period, it repurchased stocks worth $667 million and paid $224 million in dividends.
Guidance
Micron provided strong third-quarter fiscal 2022 guidance. The company anticipates revenues of $8.7 billion (+/-$200 million) for the fiscal third quarter.
For the fiscal third quarter, MU projects non-GAAP gross margin of 48% (+/-100 basis points). Operating expenses on a non-GAAP basis are estimated at $1.05 billion (+/-$25 million).
Adjusted EPS is anticipated at $2.46 (+/-10 cents).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 7.72% due to these changes.
VGM Scores
Currently, Micron has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Micron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
A month has gone by since the last earnings report for Micron (MU - Free Report) . Shares have lost about 16% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Micron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Micron Q2 Earnings Beat Estimates, Provides Strong Q3 Guidance
Micron reported stellar results for second-quarter fiscal 2022, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate and marked solid year-over-year improvements as well.
The company’s fiscal second-quarter non-GAAP earnings per share (EPS) of $2.14 beat the Zacks Consensus Estimate of $1.95. In addition, non-GAAP earnings registered year-over-year growth of a whopping 118%. Quarterly revenues of $7.79 billion outpaced the consensus mark of $7.51 billion and increased about 25% from the year-ago quarter’s $6.24 billion.
Q2 Revenue Details
Dynamic random access memory revenues of $5.72 billion, accounting for 73% of the total revenues in the fiscal second quarter, jumped 29% year over year and 2% sequentially. Bit shipments increased in the high-single-digit percentage range sequentially, while the average selling price (ASP) decreased in the mid-single-digit percentage range on a quarter-over-quarter basis.
NAND revenues of $1.96 billion, representing 25% of the total top line, were up 19% on a year-over-year basis and increased 4% quarter over quarter. While NAND ASP increased in the mid-single-digit percentage band, bit shipments remained flat sequentially.
Segment-wise, revenues of $3.46 billion from the computing and networking business unit climbed 31% from the year-ago quarter and 2% sequentially. MU noted that revenues were mainly driven by the strong performance across the data center and graphics markets. Moreover, an improvement in client revenues led to the segment’s strong performance.
Revenues of $1.91 billion from the Mobile Business Unit climbed 4% on a year-over-year basis but declined 2% sequentially. The company noted that its Mobile Business Unit division continued to perform well, driven by its leadership in providing managed NAND and multi-chip packages and strong relationships with all smartphone makers.
Embedded Business Unit’s revenues logged in $1.3 billion, up 37% from the year-ago period and 5% from the previous quarter. The year-over-year growth was primarily aided by strong execution and solid demand across the automotive and industrial markets.
Revenues from the Storage Business Unit, comprising solid-state drive (“SSD”) NAND components, totaled $1.2 billion, up 38% year over year and 2% sequentially. This year-over-year growth was mainly supported by robust SSD demand from data center customers.
Margins
Micron’s non-GAAP gross profit of $3.72 billion surged 81% year over year and 3% sequentially. Non-GAAP gross margin of 48% reflects a strong improvement from the year-ago quarter’s 33% and 47% in the first quarter of fiscal 2022. The improvement in the gross margin reflects the benefits from a favorable product portfolio mix as MU ramped up several high-value solutions along with reductions in manufacturing costs.
Micron’s non-GAAP operating income of $2.75 billion soared 119% year over year and 0.9% sequentially. Non-GAAP operating margin improved to 35% from the year-earlier quarter’s 20%, primarily on a higher gross margin, partially offset by higher operating expenses as a percentage of revenues. Non-GAAP operating margin remained flat on a quarter-over-quarter basis.
Non-GAAP operating expenses came in at $974 million compared with the previous quarter’s $891 million and the year-ago quarter’s $797 million. As a percentage of revenues, operating expenses for the fiscal second quarter came in at 12.5% compared with the previous quarter’s 11.6% and the year-ago quarter’s 12.8%.
Balance Sheet and Cash Flow
Micron exited the reported quarter with cash and investments of $11.9 billion compared with $11.5 billion recorded at the end of the prior quarter. Furthermore, MU ended the quarter with total liquidity of $14.4 billion compared with $14 billion witnessed at the end of the first quarter of fiscal 2022.
Micron’s long-term debt as of Mar 2, 2022 was $6.90 billion compared with $6.69 billion witnessed at the end of the first quarter.
The company generated operating cash flow of $3.6 billion during the fiscal second quarter and free cash flow of $1.03 billion. It repurchased stocks worth $408 million and paid $112 million in dividends.
In the first half of fiscal 2022, Micron generated operating and free cash flows of $7.57 billion and $1.7 billion, respectively. During the period, it repurchased stocks worth $667 million and paid $224 million in dividends.
Guidance
Micron provided strong third-quarter fiscal 2022 guidance. The company anticipates revenues of $8.7 billion (+/-$200 million) for the fiscal third quarter.
For the fiscal third quarter, MU projects non-GAAP gross margin of 48% (+/-100 basis points). Operating expenses on a non-GAAP basis are estimated at $1.05 billion (+/-$25 million).
Adjusted EPS is anticipated at $2.46 (+/-10 cents).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 7.72% due to these changes.
VGM Scores
Currently, Micron has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Micron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Get the latest research report on MU - FREE