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Is Micron (MU) Likely to Beat Estimates This Earnings Season?

Micron Technology MU is likely to beat expectations when it reports third-quarter fiscal 2024 results after market close on Jun 26.

The company projects fiscal third-quarter adjusted earnings of 45 cents per share (+/- 7 cents). The Zacks Consensus Estimate for the bottom line is pegged at 48 cents per share, which implies a robust improvement from the year-ago quarter’s loss of $1.43.

Meanwhile, Micron estimates revenues of $6.6 billion (+/- $200 million). The consensus mark for revenues is pegged at $6.64 billion, which suggests a 76.9% increase from the year-earlier period’s revenues of $3.75 billion.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 69.6%.

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

Micron Technology, Inc. Price and EPS Surprise

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

Factors to Consider

Micron's third-quarter performance is expected to be positively impacted by the strong demand for its memory chips used in graphics processing unit (GPU)-enabled artificial intelligence (AI) servers. Datacenter operators are enhancing their capabilities with generative AI and large language models using GPUs. Since memory is crucial for these GPU-enabled AI servers, this trend is likely to have boosted Micron's revenues in the reported quarter.

Additionally, an improving supply-demand environment is anticipated to have supported Micron's third-quarter performance. For several quarters, substantial customer inventory adjustments across end markets negatively impacted Micron’s financial results. However, the company experienced improved supply-demand conditions in the last two back-to-back quarters, leading to higher prices for DRAM and NAND.

The Zacks Consensus Estimate for DRAM revenues is pegged at $4.7 billion for the third quarter, which indicates a year-over-year increase of 75.9%. The consensus mark for NAND revenues stands at $1.82 billion, which implies a whopping 79.3% surge from the year-ago quarter.

Despite these positive factors, some challenges may have partially offset the gains. Soft consumer spending due to inflationary pressures and concerns about a global economic slowdown is likely to have weakened the demand for memory chips in the smartphone and personal computer markets.

Moreover, Micron's heavy reliance on China is a potential downside due to the ongoing trade tensions between the United States and China. The company's margins might also be strained by a higher mix of lower-margin NAND products and only minimal reductions in manufacturing costs.

Earnings Whispers

Our proven model predicts an earnings beat for Micron this earnings 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, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (50 cents per share) and the Zacks Consensus Estimate (48 cents), is +4.09%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: MU carries a Zacks Rank #2.

Other Stocks With the Favorable Combination

Per our model, General Mills, Inc. GIS, Nike, Inc. NKE and JPMorgan Chase & Co. JPM also have the right combination of elements to post an earnings beat in their upcoming releases.

General Mills is slated to report fourth-quarter fiscal 2024 results on Jun 26. The company has a Zacks Rank #3 and an Earnings ESP of +0.58% at present. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for General Mills’ fourth-quarter earnings is pegged at 99 cents per share, which suggests a decrease of 11.6% from the year-ago quarter’s earnings of $1.12. Its quarterly revenues are estimated to decline 3.1% year over year to $4.87 billion.

Nike carries a Zacks Rank #3 and has an Earnings ESP of +0.11%. The company is scheduled to report fourth-quarter fiscal 2024 results on Jun 27. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 22.6%.

The Zacks Consensus Estimate for Nike’s fourth-quarter bottom line stands at earnings of 86 cents per share, significantly higher than the year-ago quarter’s earnings of 66 cents. It is estimated to report revenues of $12.91 billion, which suggests an increase of 0.7% from the year-ago quarter.

JPMorgan carries a Zacks Rank #3 and has an Earnings ESP of +1.48%. The company is scheduled to report second-quarter 2024 results on Jul 12. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.3%.

The Zacks Consensus Estimate for JPMorgan’s second-quarter earnings is pegged at $4.17 per share, which indicates a year-over-year decrease of 4.6%. The consensus mark for revenues stands at $43.25 billion, which calls for a year-over-year rise of 4.7%.

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

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JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report

NIKE, Inc. (NKE) : Free Stock Analysis Report

General Mills, Inc. (GIS) : Free Stock Analysis Report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

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