Micron Technology Inc.
) 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
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
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
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:
APPLE INC (AAPL): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
PLEXUS CORP (PLXS): Free Stock Analysis
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), with Earnings ESP of +6.67% and a Zacks Rank #1 (Strong
), with Earnings ESP of +1.49% and a Zacks Rank #1 (Strong