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Micron (MU) Soars 5% on Narrower Q1 Loss, Strong Guidance
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Micron Technology (MU - Free Report) shares gained 4.8% during Wednesday’s extended trading session after the company reported a narrower-than-expected loss for the first quarter of fiscal 2024 and provided strong guidance for the second quarter. The company’s first-quarter sales also came well ahead of the Zacks Consensus Estimate, which boosted investors’ sentiments about its growth prospects.
Micron reported a non-GAAP loss of 95 cents per share, slightly lower than the consensus mark of a loss of 99 cents. The first-quarter non-GAAP loss was also narrower than the previous quarter’s loss of $1.07 but was way higher than the year-ago quarter’s loss of 4 cents per share.
Micron’s quarterly revenues soared 16% year over year and 18% sequentially to $4.73 billion. The top line also surpassed the Zacks Consensus Estimate of $4.66 billion.
Micron’s better-than-expected first-quarter performance reflects the benefits of an improving supply-demand environment and strong sales executions, which resulted in higher pricing for DRAM and NAND. Weak consumer demand and substantial customer inventory adjustments across end markets amid macroeconomic uncertainty hurt its quarterly performance over the past year. However, the latest quarterly performance signals that the industrywide sluggish period is nearing its end, and the company is moving back to profitability.
Micron Technology, Inc. Price, Consensus and EPS Surprise
DRAM (Dynamic Random Access Memory) revenues of $3.43 billion, accounting for 73% of the total revenues in the fiscal first quarter, increased 21% year over year and 24% sequentially. Bit shipments increased in the low-20s percentage range sequentially, while the average selling price (ASP) rose in the low-single-digit percentage range on a quarter-over-quarter basis.
NAND revenues of $1.23 billion, representing 26% of the total top line, were up 11.5% on a year-over-year 2% quarter over quarter. While NAND ASP increased approximately 20% sequentially, bit shipments decreased in the mid-teen percentage range.
Other revenues were 1% of the total revenues of $69 million in the reported quarter.
Segment-wise, revenues of $1.74 billion from the Computing and Networking Business Unit declined 1% from the year-ago quarter but jumped 45% sequentially. Revenues of $1.29 billion from the Mobile Business Unit soared 97% on a year-over-year basis while increasing 7% on a quarter-over-quarter basis.
The Embedded Business Unit’s revenues logged in at $1.04 billion, up 4% from the year-ago period and 21% from the previous quarter. Revenues from the Storage Business Unit, comprising solid-state drive NAND components, totaled $653 million, down 4% year over year and 12% sequentially.
Operating Details
For the first quarter, Micron posted a non-GAAP gross profit of $37 million compared with a non-GAAP gross profit of $934 million reported in the year-ago quarter. The non-GAAP gross margin of 0.8% reflects a significant decline from the year-ago quarter’s 22.9%. However, the metrics registered a significant improvement from the previous quarter’s non-GAAP gross loss of $366 million and gross margin of -9.1%.
Micron’s non-GAAP operating loss of $955 million was way higher than the year-ago quarter’s non-GAAP operating loss of $65 million. However, it shows improvement from the previous quarter’s non-GAAP operating loss of $1.21 billion.
The non-GAAP operating margin came in at negative 20.2%, while the company posted an operating margin of -1.6% in the year-ago quarter. In the fourth quarter of fiscal 2023, MU posted a non-GAAP operating margin of negative 30.1%.
Non-GAAP operating expenses came in at $992 million compared with the previous quarter’s $842 million and the year-ago quarter’s $999 million.
Balance Sheet & Cash Flow
Micron exited the reported quarter with cash and investments of $9.84 billion compared with the $10.52 billion recorded at the end of the prior quarter. It ended the quarter with total liquidity of $12.3 billion, down from $13 billion compared with the previous quarter.
Micron’s long-term debt as of Nov 30, 2023 was $13.5 billion compared with the $13.3 billion witnessed at the end of the fourth quarter of fiscal 2023.
The company generated operating cash flow of $1.4 billion in the first quarter. It spent $1.73 billion in capital expenditure during the quarter, resulting in an adjusted free cash flow of negative $333 million. The company paid out $129 million in dividends during the reported quarter.
Micron announced that its board approved a quarterly cash dividend of 11.5 cents per share, payable on Jan 18, 2024, to shareholders of record as of Jan 2. However, the company did not repurchase any stocks during the quarter as it kept the share buyback plan suspended since the second quarter of fiscal 2023.
Outlook
Micron provided guidance for the second quarter of fiscal 2024. The company anticipates revenues of $5.30 billion (+/-$200 million) for the fiscal second quarter. The Zacks Consensus Estimate stands at $4.99 billion.
For the fiscal second quarter, MU projects a non-GAAP gross margin of 13% (+/-150 basis points). Operating expenses on a non-GAAP basis are estimated at $950 million (+/-$15 million).
The adjusted loss per share is anticipated at 28 cents (+/-7 cents). The consensus mark is pegged at a loss of 62 cents per share.
The company provided an overwhelming second-quarter forecast on hopes of memory chip recovery in 2024. It predicts demand for DRAM chips to keep improving next year, while supply is anticipated to reach a historically normal level. This demand-supply balance is expected to fuel improvement in pricing in the years ahead.
Micron expects the supply of chips used in personal computers and mobile devices to reach the normal level in the first of 2024. Meanwhile, the boom in artificial intelligence spending is expected to fuel demand for its chips used in the data center end market.
Zacks Rank & Stocks to Consider
Micron currently carries a Zacks Rank #3 (Hold). The stock has rallied 57.4% year to date (YTD).
The Zacks Consensus Estimate for Intel’s fourth-quarter 2023 earnings has moved up 11 cents to 44 cents per share in the past 60 days. The consensus estimate for 2023 earnings has increased 55.7% to 95 cents per share in the past 60 days.
Intel's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 136.3%. Shares of INTC have surged 73.1% year to date (YTD).
The Zacks Consensus Estimate for Aspen's second-quarter fiscal 2024 earnings has moved north 14 cents to $1.49 per share in the past 60 days. The consensus estimate for fiscal 2024 earnings has increased 5 cents to $6.63 per share in the past 60 days.
Aspen's earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average negative surprise of 32.3%. Shares of AZPN have risen 3% YTD.
The Zacks Consensus Estimate for Datadog's fourth-quarter 2023 earnings has moved north 9 cents to 43 cents per share in the past 60 days. The consensus estimate for 2023 earnings has increased 2 cents to $1.53 per share in the past 30 days.
DDOG’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 28.6%. Datadog’s shares have rallied 63.8% YTD.
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Micron (MU) Soars 5% on Narrower Q1 Loss, Strong Guidance
Micron Technology (MU - Free Report) shares gained 4.8% during Wednesday’s extended trading session after the company reported a narrower-than-expected loss for the first quarter of fiscal 2024 and provided strong guidance for the second quarter. The company’s first-quarter sales also came well ahead of the Zacks Consensus Estimate, which boosted investors’ sentiments about its growth prospects.
Micron reported a non-GAAP loss of 95 cents per share, slightly lower than the consensus mark of a loss of 99 cents. The first-quarter non-GAAP loss was also narrower than the previous quarter’s loss of $1.07 but was way higher than the year-ago quarter’s loss of 4 cents per share.
Micron’s quarterly revenues soared 16% year over year and 18% sequentially to $4.73 billion. The top line also surpassed the Zacks Consensus Estimate of $4.66 billion.
Micron’s better-than-expected first-quarter performance reflects the benefits of an improving supply-demand environment and strong sales executions, which resulted in higher pricing for DRAM and NAND. Weak consumer demand and substantial customer inventory adjustments across end markets amid macroeconomic uncertainty hurt its quarterly performance over the past year. However, the latest quarterly performance signals that the industrywide sluggish period is nearing its end, and the company is moving back to profitability.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote
Q1 Top-Line Details
DRAM (Dynamic Random Access Memory) revenues of $3.43 billion, accounting for 73% of the total revenues in the fiscal first quarter, increased 21% year over year and 24% sequentially. Bit shipments increased in the low-20s percentage range sequentially, while the average selling price (ASP) rose in the low-single-digit percentage range on a quarter-over-quarter basis.
NAND revenues of $1.23 billion, representing 26% of the total top line, were up 11.5% on a year-over-year 2% quarter over quarter. While NAND ASP increased approximately 20% sequentially, bit shipments decreased in the mid-teen percentage range.
Other revenues were 1% of the total revenues of $69 million in the reported quarter.
Segment-wise, revenues of $1.74 billion from the Computing and Networking Business Unit declined 1% from the year-ago quarter but jumped 45% sequentially. Revenues of $1.29 billion from the Mobile Business Unit soared 97% on a year-over-year basis while increasing 7% on a quarter-over-quarter basis.
The Embedded Business Unit’s revenues logged in at $1.04 billion, up 4% from the year-ago period and 21% from the previous quarter. Revenues from the Storage Business Unit, comprising solid-state drive NAND components, totaled $653 million, down 4% year over year and 12% sequentially.
Operating Details
For the first quarter, Micron posted a non-GAAP gross profit of $37 million compared with a non-GAAP gross profit of $934 million reported in the year-ago quarter. The non-GAAP gross margin of 0.8% reflects a significant decline from the year-ago quarter’s 22.9%. However, the metrics registered a significant improvement from the previous quarter’s non-GAAP gross loss of $366 million and gross margin of -9.1%.
Micron’s non-GAAP operating loss of $955 million was way higher than the year-ago quarter’s non-GAAP operating loss of $65 million. However, it shows improvement from the previous quarter’s non-GAAP operating loss of $1.21 billion.
The non-GAAP operating margin came in at negative 20.2%, while the company posted an operating margin of -1.6% in the year-ago quarter. In the fourth quarter of fiscal 2023, MU posted a non-GAAP operating margin of negative 30.1%.
Non-GAAP operating expenses came in at $992 million compared with the previous quarter’s $842 million and the year-ago quarter’s $999 million.
Balance Sheet & Cash Flow
Micron exited the reported quarter with cash and investments of $9.84 billion compared with the $10.52 billion recorded at the end of the prior quarter. It ended the quarter with total liquidity of $12.3 billion, down from $13 billion compared with the previous quarter.
Micron’s long-term debt as of Nov 30, 2023 was $13.5 billion compared with the $13.3 billion witnessed at the end of the fourth quarter of fiscal 2023.
The company generated operating cash flow of $1.4 billion in the first quarter. It spent $1.73 billion in capital expenditure during the quarter, resulting in an adjusted free cash flow of negative $333 million. The company paid out $129 million in dividends during the reported quarter.
Micron announced that its board approved a quarterly cash dividend of 11.5 cents per share, payable on Jan 18, 2024, to shareholders of record as of Jan 2. However, the company did not repurchase any stocks during the quarter as it kept the share buyback plan suspended since the second quarter of fiscal 2023.
Outlook
Micron provided guidance for the second quarter of fiscal 2024. The company anticipates revenues of $5.30 billion (+/-$200 million) for the fiscal second quarter. The Zacks Consensus Estimate stands at $4.99 billion.
For the fiscal second quarter, MU projects a non-GAAP gross margin of 13% (+/-150 basis points). Operating expenses on a non-GAAP basis are estimated at $950 million (+/-$15 million).
The adjusted loss per share is anticipated at 28 cents (+/-7 cents). The consensus mark is pegged at a loss of 62 cents per share.
The company provided an overwhelming second-quarter forecast on hopes of memory chip recovery in 2024. It predicts demand for DRAM chips to keep improving next year, while supply is anticipated to reach a historically normal level. This demand-supply balance is expected to fuel improvement in pricing in the years ahead.
Micron expects the supply of chips used in personal computers and mobile devices to reach the normal level in the first of 2024. Meanwhile, the boom in artificial intelligence spending is expected to fuel demand for its chips used in the data center end market.
Zacks Rank & Stocks to Consider
Micron currently carries a Zacks Rank #3 (Hold). The stock has rallied 57.4% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Intel Corporation (INTC - Free Report) , Aspen Technology, Inc. (AZPN - Free Report) and Datadog, Inc. (DDOG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Intel’s fourth-quarter 2023 earnings has moved up 11 cents to 44 cents per share in the past 60 days. The consensus estimate for 2023 earnings has increased 55.7% to 95 cents per share in the past 60 days.
Intel's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 136.3%. Shares of INTC have surged 73.1% year to date (YTD).
The Zacks Consensus Estimate for Aspen's second-quarter fiscal 2024 earnings has moved north 14 cents to $1.49 per share in the past 60 days. The consensus estimate for fiscal 2024 earnings has increased 5 cents to $6.63 per share in the past 60 days.
Aspen's earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average negative surprise of 32.3%. Shares of AZPN have risen 3% YTD.
The Zacks Consensus Estimate for Datadog's fourth-quarter 2023 earnings has moved north 9 cents to 43 cents per share in the past 60 days. The consensus estimate for 2023 earnings has increased 2 cents to $1.53 per share in the past 30 days.
DDOG’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 28.6%. Datadog’s shares have rallied 63.8% YTD.