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Micron (MU) to Report Q1 Earnings: What's in the Cards?

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Zacks Equity Research
·4 min read
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Micron Technology MU is set to report first-quarter fiscal 2021 results on Jan 7.

The company projects earnings of 73 cents per share for the fiscal first quarter. The Zacks Consensus Estimate for quarterly earnings is pinned at 71 cents per share, having revised upward by 12 cents over the past 30 days. The consensus mark indicates 47.9% growth from the year-ago quarter.

Meanwhile, Micron estimates revenues to be in the $5.70-$5.75 billion range. The consensus mark for revenues is currently pegged at $5.73 billion, suggesting an 11.4% increase from the year-earlier period.

The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and came in line in the other, the average surprise being 7.9%.

Micron Technology, Inc. Price and Consensus

Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. Price and Consensus

Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote

Factors to Consider

Micron’s business has  been resilient to the crippling economic impact of the coronavirus pandemic. The stay-at-home situation has spurred significant chip demand from PC manufacturers and data-center operators, which is expected to have driven Micron’s fiscal first-quarter earnings.

The global quarantine situation has fueled demand for PCs and notebooks, with the surge in workers and students working and learning from home.

The work-and-learn-from home necessity has also stoked demand for cloud storage. Furthermore, lockdowns increased the usage of online and e-commerce services globally, compelling data-center operators to enhance their capacities in order to accommodate the demand spike for cloud services. All these factors are likely to have aided Micron’s top line in the quarter under review.

A solid uptick in DRAM bit shipments for the cloud, graphics, PC and notebook, 5G and automotive markets is anticipated to have been a positive in the quarter to be reported. Markedly, in fiscal fourth-quarter 2020, Micron’s DRAM bit shipments expanded significantly on a sequential basis on the rapid work-from-home infrastructure deployment, as well as increased 5G deployment. This momentum is anticipated to have continued in the to-be-reported quarter.

Nonetheless, higher mix of lower-margin NAND, coupled with low memory prices and minimal decline in manufacturing cost, is likely to have strained margins. Also, underutilization expenses associated with the impending acquisition of IM Flash Technologies, its joint venture with Intel INTC, might have dented margins.

Additionally, Micron’s heavy dependence on China is a headwind due to the ongoing tit-for-tat trade war between the United States and China. Restrictions on export to Huawei are likely to have hurt top-line growth of the memory chip maker.

During its fiscal fourth-quarter conference call, Micron had announced that it has not obtained license from the U.S. government to sell its chips to China’s Huawei Technologies. Therefore, Micron expects  the shipment ban to erode its sales in the first and second quarters of fiscal 2021. Notably, chip sales to Huawei accounted for nearly 10% of the company’s fourth-quarter fiscal 2020 total revenues.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Micron this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Micron currently sports a Zacks Rank of 1 and has an Earnings ESP of 0.00%.

Stocks With the Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Slack Technologies, Inc. WORK has an Earnings ESP of +9.09% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices, Inc. ADI has an Earnings ESP of +3.46% and carries a Zacks Rank #3, at present.

Oracle Corporation ORCL has an Earnings ESP of +0.42% and holds a Zacks Rank of 3 currently.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

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