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Micron Technology (MU) Q4 Earnings: What's in the Cards?


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Micron Technology Inc. (MU - Analyst Report) is set to report fourth-quarter fiscal 2016 results on Oct 4. Last quarter, the company posted a positive earnings surprise of 27.27%. It is worth noting that Micron has outperformed the Zacks Consensus Estimate in three out of the four preceding quarters with an average positive earnings surprise of 19.02%.

Let us see how things are shaping up for this announcement.

Factors to Consider

Micron reported mixed third-quarter fiscal 2016 results. While the top line missed the Zacks Consensus Estimate, the bottom line fared better than the same. The year-over-year comparisons on both the counts were unfavorable, primarily due to softness in the PC segment. Also, pricing pressure in client SSD and lower-than-expected sales of trade Non-Volatile products impacted the top line.

However, the acquisitions of Elpida and Rexchip (now known as Micron Memory Japan, Inc. and Micron Memory Taiwan Co., Ltd., respectively) will increase Micron’s traction in the memory market.

Micron is positive about the product launches and growing demand, particularly SSD products. The company has been constantly innovating in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, which are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.

However, Western Digital Corporation (WDC - Analyst Report) , a key player in the NAND space, could increase competition in the industry.

MICRON TECH Price and EPS Surprise

Earnings Whispers?

Our proven model does not conclusively show that Micron will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 9 cents. Hence, the difference is 0.00%.

Zacks Rank: Micron has a Zacks Rank #2 (Buy). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming release:

DragonWave Inc. (DRWI - Snapshot Report) with an Earnings ESP of +29.47% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Fastenal Company (FAST - Analyst Report) with an Earnings ESP of +2.22% and a Zacks Rank #3.

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