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What's in the Offing for Micron Technology's (MU) Q4 Earnings?

Micron Technology MU is scheduled to report fourth-quarter fiscal 2021 results on Sep 28.

The company projects fiscal fourth-quarter adjusted earnings to be $2.30 (+/- 10 cents) per share. The Zacks Consensus Estimate for the quarterly earnings is pinned at $2.31 per share, having been revised upward by 16 cents over the past 90 days. The consensus mark indicates a 113.9% surge from the year-ago quarter.

Meanwhile, Micron estimates revenues to be $8.2 billion (+/- $200 million). The consensus mark for revenues is currently pegged at $8.19 billion, suggesting a 35.3% increase from the year-earlier period.

The company’s earnings surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average surprise being 7.7%.

Let’s see how things have shaped up prior to this announcement.

Micron Technology, Inc. Price and EPS Surprise Micron Technology, Inc. Price and EPS Surprise

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

Factors to Consider

The stay-at-home situation has spurred significant chip demand from PC manufacturers and data-center operators, which is anticipated to have driven Micron’s fiscal fourth-quarter earnings. The global quarantine situation has fueled significant demand for PCs and notebooks, with the surge in workers and students working and learning from homes.

The remote-working and online-learning trend amid the coronavirus crisis has also stoked demand for cloud storage. Furthermore, lockdowns have fueled 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 during the quarter under review.

A solid uptick in the DRAM bit shipments for the cloud, graphics, PC and notebook, 5G and automotive markets is anticipated to have been a positive during the quarter to be reported.

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

Additionally, a higher mix of lower-margin NAND, coupled with low memory prices and minimal decline in manufacturing costs, is expected to have strained margins.

Furthermore, higher prequalification and labor expenses are likely to have negatively impacted Micron’s fourth-quarter bottom-line performance. During the fiscal second-quarter conference call, the company noted that it expects a rise in operating expenses during the second half of fiscal 2021 due to the higher prequalification and labor expenses.

Moreover, operating expenses are expected to have flared up during the fiscal fourth quarter due to the resumption of the previously-delayed fiscal 2021 salary hikes in the fiscal third quarter. This might have hurt the company’s margins and profitability during the quarter under review.

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 carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post earnings beats in their upcoming releases:

Alcoa AA has an Earnings ESP of +33.55% and sports a Zacks Rank #1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

McCormick & Company MKC has an Earnings ESP of +0.28% and currently carries a Zacks Rank of 3.

CarMax KMX has an Earnings ESP of +0.18% and holds a Zacks Rank of 3, currently.


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