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Seagate (STX) to Report Q1 Earnings: What's in the Cards?

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Seagate Technology Holdings plc STX is scheduled to report first-quarter fiscal 2022 earnings on Oct 22.

The company projects fiscal first-quarter non-GAAP earnings of $2.20 (+/-15 cents) per share. The Zacks Consensus Estimate for earnings per share has been steady at $2.21, which suggests an improvement of 137.63% from the year-ago quarter’s reported figure.

Seagate expects fiscal first-quarter revenues of $3.1 billion (+/- $150 million). The Zacks Consensus Estimate for revenues is pegged at $3.1 billion, which marks an increase of 34.1% from the year-ago quarter’s reported tally.

The company surpassed the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of 11.4%, on average.

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

Factors Setting the Tone for Q1

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

With return to workplace trend picking up pace, increases in on-premises IT infrastructure investments are likely to have supported further recovery witnessed in the enterprise markets.

Healthy demand in the video and image applications market is anticipated to have positively contributed to top-line performance in the fiscal first quarter.

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

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

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

Strength in PC shipments in the third 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 3.9% year over year to 86.7 million units in the third quarter of calendar year 2021. PCs have been the biggest user of HDDs. Seagate generates bulk of its revenues from these devices.

However, supply chain constraints, component shortages and logistics bottlenecks witnessed globally are likely to have affected the company’s performance in the fiscal first quarter.

Higher freight costs, owing to the COVID-19 crisis along with increasing expenses on product enhancements and 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 does not predict 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 0.00% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may consider as our proven model shows that these have the right mix of elements to beat estimates this time.

Texas Instruments TXN has an Earnings ESP of +9.22% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices AMD has an Earnings ESP of +2.31% and a Zacks Rank of 2.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Texas Instruments Incorporated (TXN) : Free Stock Analysis Report

Advanced Micro Devices, Inc. (AMD) : 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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