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Factors Setting the Tone for Seagate's (STX) Q2 Earnings

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Seagate Technology plc (STX - Free Report) is scheduled to report second-quarter fiscal 2020 earnings on Feb 4.

The company anticipates second-quarter fiscal 2020 non-GAAP earnings to be $1.32 (+/- 5%) per share.

The Zacks Consensus Estimate for earnings is pegged at $1.31 per share, suggesting a decline of 7.1% from the year-ago reported figure. Notably, estimates have remained stable in the past 30 days.

Seagate expects second-quarter fiscal 2020 revenues to be 2.72 billion (+/- 5%).

The Zacks Consensus Estimate for revenues is pegged at $2.72 billion, indicating an improvement of 0.2% from the year-ago quarter.

Notably, the company beat the Zacks Consensus Estimate for earnings in the trailing four quarters by 8.23%, on average.

Seagate Technology PLC Price and EPS Surprise

Seagate Technology PLC Price and EPS Surprise

Seagate Technology PLC price-eps-surprise | Seagate Technology PLC Quote

Factors Likely to Have Influenced Q2 Results

Secular trend in data growth is likely to have driven demand for Seagate’s high storage capacity offerings, primarily the latest 16-terabyte products. This, in turn, is likely to have benefited the fiscal second-quarter performance.

Moreover, Seagate is expected to have benefited from increasing traction for mass storage solutions across its edge and enterprise end markets.

Notably, the company shipped 50.6 exabytes for the enterprise HDD market (includes nearline and mission critical) in the fiscal first quarter. This marked a sequential increase of 34.2% in exabytes shipments, a trend that is expected to have continued in the fiscal second quarter.

Further, improving trend in PC shipments in fourth-quarter 2019 is likely to have driven HDD sales, which is likely to reflect in the fiscal second-quarter results.

However, persistent decline in NAND flash pricing owing to oversupply is likely to have affected the fiscal second-quarter performance.

Further, increasing expenditure on product innovation and development amid stiff competition in the storage market from Western Digital WDC and other peers, is likely to have impacted profitability in the fiscal second quarter.

What Our Model Says

According to the Zacks model, a 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 #3, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a couple of stocks that you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +10.80% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bruker Corporation BRKR has an Earnings ESP of +0.86% and a Zacks Rank #2.

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