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Micron (MU) Q1 Earnings to Gain From Solid Memory Chip Demand

·4 min read

Micron Technology MU is scheduled to report first-quarter fiscal 2022 results on Dec 20.

The company’s fiscal first-quarter performance is likely to have benefited from strong memory chip demand from data-center operators, personal computers (PCs) and smartphone makers along with the auto industry's recovery from the pandemic woes.

Strong Memory Chip Demand Environment

The pandemic-induced lockdown and social-distancing measures are spurring demand for PCs and notebooks as more workers and students are now working and learning from their homes. This trend is likely to have continued in the fiscal first quarter as well, thereby aiding Micron’s top line.

The work-and-learn-from-home necessity amid the COVID-19 crisis is stoking demand for cloud storage. Furthermore, the social-distancing trend has boosted the usage of online services globally. Therefore, data-center operators are enhancing their cloud-storage capacities in a bid to accommodate the increasing demand for cloud services, which is fueling demand for memory chips.

Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. Price and EPS Surprise
Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote

Moreover, solid recoveries in sales across the smartphone and automotive industries are likely to have supported MU’s overall financial performance during the quarter under review. According to the latest forecast by Gartner, the worldwide sales of smartphones will likely be up 11.4% year over year to 1.5 billion units in 2021. This suggests a sharp improvement from the 10.5% decline registered in 2020.

However, industry-wide component supply constraints are expected to have hurt Micron’s top and bottom lines in the first quarter. On its fourth-quarter fiscal 2021 earnings conference call, Micron warned that bit shipments for the dynamic random access memory (“DRAM”) and NAND memory chips are set to decline in the fiscal first quarter as PC manufacturers are adjusting their memory and storage purchases due to the shortage of other components required to complete PC assembling.

Furthermore, MU is witnessing supply constraints for certain integrated circuit components, which are expected to somewhat negatively impact bit shipments in the quarter under review.

Zacks Rank & Stocks to Consider

Currently, Micron carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector include Google-parent Alphabet GOOGL, Diodes DIOD and PTC Inc. PTC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Alphabet’s fourth-quarter 2021 earnings has been revised downward by a penny to $26.71 per share over the last 30 days. For 2021, earnings estimates have moved upward by 43 cents to $108.29 per share in the last 30 days.

Alphabet’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 41.5%. GOOGL stock has rallied 65% year to date (YTD).

The Zacks Consensus Estimate for Diodes’ fourth-quarter 2021 earnings has been revised upward by 23.9% to $1.45 per share over the last 30 days. For 2021, earnings estimates have moved upward by 6.3% to $5.06 per share over the last 30 days.

Diodes’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 10%. Shares of DIOD have rallied 43.3% YTD.

The consensus mark for PTC’s first-quarter fiscal 2022 earnings has been revised upward to $1.00 per share from 90 cents 60 days ago. For fiscal 2022, earnings estimates have been revised upward by 26 cents to $4.19 per share in the last 60 days.

PTC’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missed the same on one occasion, the average surprise being 47.8%. Shares of PTC have declined 3.4% YTD.


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