Seagate Technology Holdings plc ( STX Quick Quote STX - Free Report) is scheduled to report second-quarter fiscal 2022 earnings on Jan 26.
The company projects fiscal second-quarter non-GAAP earnings of $2.35 (+/-15 cents) per share. The Zacks Consensus Estimate for earnings per share has been steady at $2.36, which suggests an improvement of 82.9% from the year-ago quarter’s reported figure.
Seagate expects fiscal second-quarter revenues of $3.1 billion (+/- $150 million). The Zacks Consensus Estimate for revenues is pegged at $3.11 billion, which marks an increase of 18.4% from the year-ago quarter’s reported tally.
The company surpassed the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of 11.3%, on average. In the past year, shares of the company have increased 56.1% compared with the
industry’s decline of 58.9%. Factors Setting the Tone for Q2
Seagate’s mass storage capacity solutions are likely to have witnessed continued momentum driven by strong cloud data center demand, recovery in the enterprise market and increased digital transformation investments by business enterprises in the about-to-be-reported quarter. In the last reported quarter, revenues from mass capacity storage soared 53.8% year over year and crossed $2 billion mark for the first time.
Robust demand in the video and image applications market is anticipated to have driven demand for high-capacity hard disk drives or HDDs in the fiscal second quarter. This is likely to have positively impacted revenues from mass capacity solutions’ portfolio.
Seagate’s nearline and mission-critical drives are expected to gain from the company’s collaborations with several leading cloud providers. Seagate is working with these cloud providers to deliver mass storage solutions at an exabyte scale.
The company’s mass capacity portfolio is expected to reflect incremental gains from multiple varieties of its 20-terabyte drives in addition to 18 terabyte drives.
Seagate’s Lyve Cloud business is likely to have seen healthy traction among customers. Lyve Cloud is the company’s storage-as-a-service platform (only S3-compatible) intended primarily to help business organizations manage exponential unstructured data growth.
Higher demand for solid-state drives or SSDs in data centers and an increase in gaming activities are expected to have lifted sales of gaming SSDs on improving demand from notebooks and video game consoles. This is likely to have favored the top line performance in the to-be-reported quarter.
Strength in PC shipments in the fourth quarter of the calendar year 2021 is likely to have contributed to HDD sales in the company’s performance in the quarter under review.
Going by the IDC report, traditional PC shipments were up 1% on a year-over-year basis to 92.7 million in the quarter in fourth-quarter 2021. PCs have been the biggest user of HDDs. Seagate generates the bulk of its revenues from these devices.
However, continued supply chain constraints, semiconductor component shortages and logistics bottlenecks witnessed globally are likely to have affected the company’s performance in the fiscal second quarter.
Higher freight costs, owing to the COVID-19 crisis along with increasing expenses on product enhancements and stiff competition in the storage market, are likely to have put pressure on the bottom line in the quarter under review.
What the Zacks Model Unveils
Our proven model does not predict earnings beat for Seagate this time around. The combination of a positive
Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Seagate has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). You can uncover the best stocks to buy or sell before they’re reported with our
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