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Red-Hot Micron to Report Earnings Today: What's in Store?

Tirthankar Chakraborty

Micron Technology, Inc. MU is set to report first-quarter fiscal 2020 earnings results today, after market close. The company’s earnings results are to come at a time when shares of the memory chipmaker as well as the broader semiconductor industry are soaring on the U.S.-China initial trade accord. In the past week, Micron saw its shares climb 12%, reaching its year-to-date growth to more than a whopping 65%.

Pick-up in economic activities has boosted overall demand for chip stocks, something that should bode well for Micron as well. Micron Chief Executive Sanjay Mehrotra has said that “when I look at 2020, I believe that the industry demand/supply environment will be in a lot healthier place.”

However, Micron’s Q1 profit margin might reflect the impact of the phase trade issues. Needless to say, the United States is the largest semiconductor manufacturing country with China being its biggest importer. And Micron’s heavy dependence on China is anticipated to keep the company under pressure.

What’s more, the broader memory chip market took a hit during the reporting phase and has left Micron with declining sales and rising inventory levels. Perpetual reduction in DRAM and NAND flash pricing due to oversupply is another concern.

In fact, persistent weakness in pricing across most market segments is expected to have dampened Micron’s computing and networking business unit. The Zacks Consensus Estimate for revenues from this segment stands at $1.9 billion, indicating a decline of 48.6% from the year-ago reported number.

To top it, increase in production of domestic memory chips in China might jeopardize Micron’s earnings results this time around. Lest we forget, Changxin Memory Technologies recently unveiled China’s first domestically designed DRAM chip.

And to put these negative factors into perspective, analysts now expect the company’s fiscal Q1 2020 earnings per share to decline to 48 cents from $2.97 a year ago.

 

In fact, Micron has an Earnings ESP of -2.29%. This is Zacks’ proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

Micron Technology, Inc. Price and EPS Surprise

 

Micron Technology, Inc. Price and EPS Surprise

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

Micron currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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