Is Micron (MU) Poised to Beat Earnings? - Analyst Blog

By
A A A

We expect Micron Technology Inc. ( MU ) to beat expectations when it reports fourth-quarter 2013 results on Oct 10, 2013. In the last reported quarter, it posted a positive surprise of approximately 33.3%, and we believe that the company will continue with its upbeat performance in this quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Micron is likely to beat earnings because it has the right combination of two key components:

Positive Zacks ESP: Micron currently has a Zacks Earnings ESP of +4.35%. This is because the Most Accurate Estimate stands at 24 cents per share, while the Zacks Consensus Estimate is pegged at 23 cents.

Zacks Rank #1 (Strong Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have higher chances of beating earnings estimates. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Micron's Zacks Rank #1 (Strong Buy) and Earnings ESP of +4.35% makes us confident of a positive earnings beat on Oct 10.

What Is Driving Better-than-Expected Earnings?

Micron's innovations in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.

The other positive factor for Micron is the Elpida acquisition, which is expected to increase the wafer manufacturing capacity by approximately 50%, helping it to capitalize on any demand shortage.

The company is also optimistic about supply/demand balance for DRAM and NAND memory chips in 2013 and 2014, which should support prices. The DRAM market is already seeing supply constraints due to the rising demand for the memory chips by smartphone makers such as Samsung and Apple ( AAPL ).

We believe that tight expense control (Micron is expected to cut approximately 5% of its 30k strong workforce by fiscal 2014), manufacturing efficiency and the secular shift toward mobile DRAM will benefit Micron's fundamentals in the coming quarters.

Other Stocks to Consider

Apart from Micron, other stocks that are likely to beat earnings estimates in the to-be-reported quarter include:

  • Spansion Inc. ( CODE ), with Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy)
  • Plexus Corp. ( PLXS ), with Earnings ESP of +1.49% and a Zacks Rank #1 (Strong Buy)


APPLE INC (AAPL): Free Stock Analysis Report

MICRON TECH (MU): Free Stock Analysis Report

PLEXUS CORP (PLXS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AAPL , MU , PLXS

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

44,823,339
  • $75.19 ▲ 0.28%
43,744,171
  • $3.44 ▼ 0.29%
42,340,022
  • $97.671 ▲ 0.66%
34,178,145
  • $17.62 ▼ 1.23%
34,028,998
  • $15.59 ▼ 0.19%
32,055,708
  • $21.23 ▼ 2.41%
31,539,235
  • $3.76 ▲ 0.80%
30,434,619
    $34.25 unch
As of 7/25/2014, 04:03 PM