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Here's What to Expect Ahead of Seagate's (STX) Q4 Earnings

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Seagate Technology Holdings plc STX is slated to report fourth-quarter fiscal 2021 earnings on Jul 21.

The company projects fourth-quarter fiscal 2021 non-GAAP earnings of $1.85 (+/-15 cents) per share. On Jun 8, the company raised its guidance for the fiscal fourth-quarter, driven by solid demand for its solutions in the mass capacity markets and distribution channel.

The Zacks Consensus Estimate for earnings per share has been steady at $1.81, which suggests an improvement of 50.8% from the year-ago quarter’s reported figure.

Seagate expects fourth-quarter fiscal 2021 revenues of $2.95 billion (+/- $150 million). The Zacks Consensus Estimate for revenues is pegged at $2.94 billion, which marks an increase of 16.8% from the year-ago quarter’s reported tally.

Seagate Technology Holdings PLC Price and EPS Surprise

Seagate Technology Holdings PLC Price and EPS Surprise
Seagate Technology Holdings PLC Price and EPS Surprise

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

The company surpassed the Zacks Consensus Estimate in the last three quarters and missed the same once. It has a trailing four-quarter earnings surprise of 7.94%, on average.

Factors Setting the Tone for Q4

Robust cloud data center demand, recovery in enterprise market and increasing investments in digital transformation by business enterprises is likely to have driven demand for Seagate’s mass storage capacity solutions in the about-to-be-reported quarter.

Seagate’s nearline and mission-critical drives are expected to gain from the company’s recent collaborations with several leading cloud providers. Seagate is working with these cloud providers to deliver mass storage solutions at exabyte scale.

In addition to 16 and 18 terabyte (TB) drives, the company’s mass capacity portfolio is expected to reflect incremental gains from its 20-terabyte HAMR drives. It began shipping HAMR drives in November 2020.

Improving demand in video and image applications’ market is anticipated to have positively contributed to top-line performance in fourth-quarter fiscal 2021.

Continued strength in PC shipments in the second quarter of calendar year 2021 is likely to have contributed to hard disk drives or HDD sales in the company’s performance in the quarter under review.

Per an IDC report, PC shipments rose 13.2% year over year to 83.6 million units in the second quarter of calendar year 2021. PCs have been the biggest user of HDDs. Seagate generates bulk of its revenues from these devices.

Higher demand for solid state drives or SSDs in data centers as well as uptick in gaming activities is expected to have boosted sales of gaming SSDs on improving demand from notebooks and video game consoles. This is likely to have driven revenues in the to-be-reported quarter.

Management anticipates higher freight costs, owing to the COVID-19 crisis. Increasing expenses on product enhancements amid stiff competition in the storage market from the likes of Western Digital WDC is likely to have put pressure on the bottom line in the quarter under review.

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 5.33% and a Zacks Rank #1. 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 other stocks you may consider as our proven model shows that these also have the right mix of elements to beat estimates this time.

Texas Instruments TXN has an Earnings ESP of +1.60% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apple AAPL has an Earnings ESP of +3.40% and a Zacks Rank of 2.


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Texas Instruments Incorporated (TXN) : Free Stock Analysis Report

Apple Inc. (AAPL) : Free Stock Analysis Report

Western Digital Corporation (WDC) : Free Stock Analysis Report

Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report

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