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Factors to Note Ahead of Micron Technology's (MU) Q4 Earnings

Micron Technology MU is scheduled to report fourth-quarter fiscal 2022 results on Sep 29.

The company projects fiscal fourth-quarter adjusted earnings of $1.63 (+/- 20 cents) per share. The Zacks Consensus Estimate for its quarterly earnings stands at $1.42 per share and has been revised downward by a couple of cents in the past 30 days. The consensus mark indicates a 41.3% decline from the year-ago quarter’s earnings of $2.42 per share.

Meanwhile, Micron estimates revenues of $7.2 billion (+/- $400 million). The consensus mark for revenues is pegged at $6.92 billion, suggesting a 16.3% decrease from the year-earlier period.

The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 5.7%.

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

Micron Technology, Inc. Price and EPS Surprise

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 at Play

Micron’s fourth-quarter overall performance is likely to have been negatively impacted by soft consumer spending due to rising inflationary pressure and growing concerns over the global economic slowdown. Softened consumer spending has resulted in weakening memory chip demand from the smartphone and personal computer (PC) end markets.

Moreover, Micron’s exposure to PC and notebooks might have hurt its overall sales growth in the quarter under review. PC and notebook manufacturers are adjusting their memory and storage purchases due to the shortage of other components to complete PC assembling.

However, Micron expects the demand for memory chips from the data center end market to remain strong, driven by increased investments by organizations in cloud adoption and digital transformation initiatives. Moreover, a solid uptick in dynamic random access memory bit shipments for the graphics, 5G, automotive and industrial markets is anticipated to continue acting as a key catalyst.

We believe that growth in the data center and automotive and industrial end markets is likely to have partially offset the negative impact of weakening demand across smartphone and PC markets.

Industry-wide component supply constraints are expected to have hurt Micron’s top and bottom lines in the fourth quarter. MU is witnessing supply constraints for certain integrated circuit components, which are expected to have negatively impacted bit shipments in the quarter under review.

The memory chip maker’s heavy dependence on China is a headwind due to the ongoing tit-for-tat trade spat between the United States and China. Additionally, a higher mix of lower-margin NAND, coupled with low memory prices and a minimal decline in manufacturing costs, is expected to have strained margins.

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 a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though Micron has an Earnings ESP of +2.86%, it carries a Zacks Rank of 5 (Strong Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Apple AAPL, Meta Platforms META and Lattice Semiconductor LSCC have the right combination of elements to post an earnings beat in their upcoming releases.

Apple is expected to report fourth-quarter fiscal 2022 results on Oct 27. The company carries a Zacks Rank #3 and has an Earnings ESP of +0.14% at present. Apple’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.25 per share, suggesting an improvement of 0.8% from the year-ago quarter’s earnings of $1.24. AAPL’s quarterly revenues are estimated to increase 5.7% year over year to $88.09 billion.

Meta Platforms carries a Zacks Rank #3 and has an Earnings ESP of +5.85%. The company is anticipated to report third-quarter 2022 results on Oct 24. Meta Platforms’ earnings surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing the same on two occasions, the average surprise being 0.8%.

The Zacks Consensus Estimate for META’s third-quarter earnings is pegged at $1.94 per share, indicating a year-over-year decline of 39.8%. The consensus mark for revenues stands at $27.51 billion, suggesting a year-over-year decrease of 5.2%.

Lattice sports a Zacks Rank #1 and has an Earnings ESP of +0.46%. The company is anticipated to report its third-quarter 2022 results on Nov 1. Lattice’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.1%.

The Zacks Consensus Estimate for Lattice’s third-quarter earnings stands at 44 cents per share, implying a year-over-year increase of 57.1%. LSCC is estimated to report revenues of $166.1 million, which suggests growth of 25.9% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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