Factors to Note Ahead of Seagate's (STX) Q2 Earnings Release
Seagate Technology Holdings plc STX is scheduled to report second-quarter fiscal 2024 earnings on Jan 24.
The Zacks Consensus Estimate is pegged at a loss of 8 cents per share. STX reported earnings per share of 16 cents in the prior-year quarter. The consensus estimate for revenues is pegged at $1.55 billion, suggesting a decline of 18.1% on a year-over-year basis.
Management anticipates second-quarter fiscal 2024 revenues to be $1.55 billion (+/- $150 million). Non-GAAP loss is expected to be 10 cents per share (+/- 20 cents).
The company has a negative earnings surprise of 47.6%, on average, in the trailing four quarters.
Seagate Technology Holdings PLC Price and EPS Surprise
Seagate Technology Holdings PLC price-eps-surprise | Seagate Technology Holdings PLC Quote
Factors Setting the Tone for Q2
Seagate’s performance is likely to have been affected by global macroeconomic turmoil (especially lower economic activity in China) and inflation. The company expects fiscal second-quarter performance to be affected by inventory digestion by clients.
The company expects enterprise system business to be affected by reserved IT spending amid macroeconomic weakness. Also, the company’s margin is likely to be affected by higher underutilization costs.
Our estimate for revenues from the HDD segment is pegged at $1,393 million, indicating a plunge of 16.2% year over year. The estimate for the non-HDD (which includes enterprise data solutions, cloud systems and solid-state drives) segment is pegged at $159 million, implying a decrease of 29% year over year.
The company’s HDD product line is likely to have benefited from several cloud customers who are making investments in traditional servers and other IT hardware. The company expects mass capacity demand to rise owing to incremental demand for its Nearline products from cloud and enterprise customers.
Also, the company is likely to have benefited from the rapid adoption of a 20+TB platform and volume ramp for HAMR (heat-assisted magnetic recording) 30+TB qualification units.
What the Zacks Model Unveils
Our proven model predicts an 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 +100% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.
Apple AAPL has an Earnings ESP of +2.13% and carries a Zacks Rank #2 at present. Apple is scheduled to release first-quarter fiscal 2024 results on Feb 1. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Apple’s to-be-reported quarter’s earnings and revenues is pegged at $2.09 per share and $117.5 billion, respectively. Shares of AAPL have gained 35.8% in the past year.
Alphabet GOOGL has an Earnings ESP of +2.26% and a Zacks Rank #3 at present. Alphabet is scheduled to release fourth-quarter 2023 results on Jan 30.
The Zacks Consensus Estimate for Apple’s to-be-reported quarter’s earnings and revenues is pegged at $1.60 per share and $70.7 billion, respectively. Shares of GOOGL have gained 46.7% in the past year.
American Airlines Group Inc. AAL has an Earnings ESP of +43.10% and a Zacks Rank #2 at present. AAL will release results on Jan 25.
The Zacks Consensus Estimate for American Airline’s to-be-reported quarter’s earnings and revenues is pegged at 6 cents per share and $13 billion, respectively. Shares of AAL have lost 15.6% in the past year.
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