Back to top

Image: Shutterstock

Micron (MU) to Report Q2 Earnings: What's in the Offing?

Read MoreHide Full Article

Micron Technology (MU - Free Report) is slated to report second-quarter fiscal 2021 results on Mar 31.

The company projects earnings in the range of 93-98 cents per share for the fiscal second quarter. The Zacks Consensus Estimate for quarterly earnings is pinned at 95 cents per share, having revised upward by 20 cents over the past 30 days. The consensus mark indicates a 111.1% surge from the year-ago quarter.

Meanwhile, Micron estimates revenues to be in the $6.20-$6.25 billion range. The consensus mark for revenues is currently pegged at $6.23 billion, suggesting a 29.8% increase from the year-earlier period.

The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 10.4%.

Factors to Consider

Micron’s business has been resilient to the crippling economic impact of the coronavirus pandemic. The stay-at-home situation has spurred significant chip demand from PC manufacturers and data-center operators, which is anticipated to have driven Micron’s fiscal second-quarter earnings.

The global quarantine situation has fueled significant demand for PCs and notebooks, with the surge in workers and students working and learning from homes.

The work-and-learn-from home necessity has also stoked demand for cloud storage. Furthermore, lockdowns have increased the usage of online and e-commerce services globally, compelling data-center operators to enhance their capacities in order to accommodate the demand spike for cloud services. All these factors are likely to have aided Micron’s top line during the quarter under review.

A solid uptick in DRAM bit shipments for the cloud, graphics, PC and notebook, 5G and automotive markets is anticipated to have been a positive during the quarter to be reported.

Nonetheless, higher mix of lower-margin NAND, coupled with low memory prices and minimal decline in manufacturing cost, is likely to have strained margins. Also, underutilization expenses associated with the impending acquisition of IM Flash Technologies, its joint venture with Intel (INTC), might have dented margins.

Additionally, Micron’s heavy dependence on China is a headwind due to the ongoing tit-for-tat trade spat between the United States and China. Restrictions on export to Huawei are expected to have hurt top-line growth of the memory chip maker.

During its fourth-quarter fiscal 2020 conference call, Micron had announced that it has not obtained license from the U.S. government to sell its chips to China’s Huawei Technologies. Therefore, Micron expectsthe shipment ban to erode its sales in the first and second quarters of fiscal 2021. Markedly, chip sales to Huawei accounted for nearly 10% of the company’s fourth-quarter fiscal 2020 total revenues.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Micron this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. 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 of 2 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post earnings beats in their upcoming releases:

The Goldman Sachs Group, Inc. (GS - Free Report) has an Earnings ESP of +18.74% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

JPMorgan Chase & Co. (JPM - Free Report) has an Earnings ESP of +9.94% and holds a Zacks Rank of 2 currently.

Lululemon Athletica Inc. (LULU - Free Report) has an Earnings ESP of +2.28% and carries a Zacks Rank #3, at present.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Published in