Micron Technology Inc. (MU) is set to report first-quarter fiscal 2015 results on Jan 6. Last quarter, the company posted in-line earnings. It is worth noting that Micron has outperformed the Zacks Consensus Estimate in three out of the four preceding quarters with a positive earnings surprise average of 32.4%.
Let us see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Micron reported modest fourth-quarter fiscal 2014 results. While the top line surpassed the Zacks Consensus Estimate, the bottom line matched the same. Revenues also compared favorably on a year-over-year basis. The results were primarily boosted by improving market conditions as well as an encouraging operating performance.
Micron has been constantly innovating in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, which are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products. It is worth mentioning that Micron ranks as the #3 NAND supplier, according to IDC.
The company is positive about its product launches and growing demand for its products, particularly SSD products. The company is also optimistic about supply/demand balance for DRAM and NAND memory chips, which should support prices.
Additionally, we believe that the acquisition of Elpida will help Micron’s share in the memory market. The acquisition also brought Apple Inc. (AAPL) on to the customer roster, which is a positive for future growth.
However, it may not be easy for Micron to capture share from SanDisk Corp a key player in the NAND space.
Earnings Whispers?
Our proven model does not conclusively show that Micron will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 92 cents. Hence, the difference is 0.00%.
Zacks Rank: Micron sports a Zacks Rank #1 (Strong Buy). Though Zacks Ranks #1, 2 or 3 increase the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are a couple of othercompaniesyou may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Sonic Corp. (SONC) with Earnings ESP of +6.25% and a Zacks Rank #2 (Buy)
Alcoa Inc. (AA) withan Earnings ESP of +12.00% and a Zacks Rank #3 (Hold)
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