Micron Technology Inc. MU is set to report second-quarter fiscal 2015 results on Apr 1. Last quarter, the company posted a positive earnings surprise of 5.4%. It is worth noting that Micron has outperformed the Zacks Consensus Estimate in three out of the four preceding quarters with an average positive earnings surprise of 14%. Let us see how things are shaping up for this announcement.
Factors to Consider
Micron reported mixed first-quarter fiscal 2015 results. While the bottom line surpassed the Zacks Consensus Estimate, the top line missed the same.
Micron 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 in 2015, which should support prices.
Recently, Micron and Intel unveiled a mutually developed 3D NAND technology to meet the growing demand for personal storage and also cater to the media and entertainment market. We believe that Micron’s entry into the 3D NAND market can help it to increase its NAND market share.
However, the company has witnessed two downward revisions for the current quarter and six downward revisions for fiscal 2015 over the past one month.
Moreover, it may not be easy for Micron to capture share from SanDisk Corp SNDK a key player in the NAND space.
Earnings Whispers?
Our proven model does not conclusively show that Micron Technology will beat estimates 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: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, currently stands at -1.27%. This is because the Most Accurate estimate of 78 cents is lower than the Zacks Consensus Estimate of 79 cents.
Zacks Rank #3 (Hold): Micron’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with Zacks Rank #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 some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
JPMorgan Chase & Co. JPM with Earnings ESP of +1.46% and a Zacks Rank #3
Alcoa Inc. AA with Earnings ESP of +8.00% and a Zacks Rank #3
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