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Micron (MU) Set to Report Q3 Earnings: What's in Store?

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Micron Technology (MU - Free Report) is scheduled to report third-quarter fiscal 2022 results on Jun 30.

The company projects fiscal third-quarter adjusted earnings of $2.46 (+/- 10 cents) per share. The Zacks Consensus Estimate for its quarterly earnings stands at $2.45 per share and has remained unchanged over the past 60 days. The consensus mark indicates a 30.3% surge from the year-ago quarter.

Meanwhile, Micron estimates revenues of $8.7 billion (+/- $200 million). The consensus mark for revenues is pegged at $8.69 billion, suggesting a 17.1% increase from the year-earlier period.

The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 6.6%.

Let’s see how things have shaped up before this announcement.

 

Micron Technology, Inc. Price and EPS Surprise Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote

Factors at Play

The remote-working and online-learning trend amid the COVID-19 crisis has stoked the demand for cloud storage. Furthermore, lockdowns and social distancing measures have fueled the usage of online and e-commerce services globally, compelling data center operators to enhance their capacities to accommodate the demand spike for cloud services. All these factors are likely to have aided MU’s top line during the quarter under review.

A solid uptick in dynamic random access memory bit shipments for the cloud, graphics, 5G and automotive markets is anticipated to have acted as an upside during the to-be-reported quarter.

However, Micron’s exposure to personal computers (“PC”) and notebooks might have hurt its overall sales growth in the quarter under review. PC and notebook manufacturers are adjusting their memory and storage purchases due to the shortage of other components to complete PC assembling.

Moreover, industry-wide component supply constraints are expected to have hurt Micron’s top and bottom lines in the third quarter. MU is witnessing supply constraints for certain integrated circuit components, which are expected to have negatively impacted bit shipments in the quarter under review.

The memory chip maker’s heavy dependence on China is a headwind due to the ongoing tit-for-tat trade spat between the United States and China.  Additionally, a higher mix of lower-margin NAND, coupled with low memory prices and a minimal decline in manufacturing costs, is expected to have strained margins.

Moreover, operating expenses are expected to have flared up during the fiscal third quarter due to the resumption of previously delayed fiscal 2021 salary hikes. This might have hurt Micron’s margins and profitability during the quarter under review.

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 a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Micron currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of -2.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Delta Air Lines (DAL - Free Report) , Citigroup (C - Free Report) and Heartland Express (HTLD - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

Delta Air Lines is expected to report second-quarter 2022 results on Jul 13. The company carries a Zacks Rank #3 and has an Earnings ESP of +4.50% at present. Delta Air Lines’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 43.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.70 per share, suggesting a strong improvement from the year-ago quarter’s loss of $1.07. DAL’s quarterly revenues are estimated to increase 84.4% year over year to $13.14 billion.

Citigroup carries a Zacks Rank #3 and has an Earnings ESP of +4.80%. The company is slated to report second-quarter 2022 results on Jul 15. Citigroup’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 24.5%.

The Zacks Consensus Estimate for C’s second-quarter earnings is pegged at $1.63 per share, indicating a year-over-year decline of 42.6%. The consensus mark for revenues stands at $18.03 billion, suggesting a year-over-year increase of 3.2%.

Heartland Express carries a Zacks Rank #3 and has an Earnings ESP of +6.93%. The company is anticipated to report its second-quarter 2022 results on Jul 18. Heartland Express’ earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while matching the same on one occasion, the average surprise being 3.5%.

The Zacks Consensus Estimate for Heartland Express’ second-quarter earnings stands at 25 cents per share, implying a year-over-year decrease of 3.9%. HTLD is estimated to report revenues of $160.4 million, which suggests growth of 4.1% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.