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Micron (MU) Up 14% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Micron (MU - Free Report) . Shares have added about 14% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Micron due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Micron Q1 Earnings & Revenues Miss Expectations, Fall Y/Y
Micron kicked off fiscal 2023 on a very disappointing note as the company’s fiscal first-quarter earnings and revenues declined on a year-over-year basis.
Micron reported a non-GAAP loss of 4 cents per share, which missed the Zacks Consensus Estimate of a loss of 2 cents. The bottom line compared unfavorably with the prior-year quarter’s earnings of $2.16 per share.
Quarterly revenues of Micron plunged 46.8% year over year to $4.09 billion, which missed the consensus mark of $4.08 billion. The company cited rapidly weakening consumer demand and substantial customer inventory adjustments across end markets amid macroeconomic uncertainty as the reasons behind the dismal quarterly performance.
Q1 Top-Line Details
Dynamic random access memory revenues of $2.83 billion, accounting for 69% of the total revenues in the fiscal first quarter, declined 49% year over year and 41% sequentially. Bit shipments decreased approximately in the mid-20 percentage sequentially while average selling price (ASP) plunged in the low-20 percentage on a quarter-over-quarter basis.
NAND revenues of $1.10 billion, representing 27% of the total top line, were down 41% on a year-over-year basis and 35% quarter over quarter. While NAND ASP decreased in the low-20 percentage sequentially, bit shipments declined in the low-teens percentage range.
Other revenues were 4% of total revenues at $153 million in the reported quarter.
Segment-wise, revenues of $1.75 billion from the computing and networking business unit plunged 49% from the year-ago quarter and 40% sequentially. Revenues of $655 million from the Mobile Business Unit declined 66% on a year-over-year basis and 57% on a quarter-over-quarter basis.
Embedded Business Unit’s revenues logged in $1 billion, down 18% from the year-ago period and 23% from the previous quarter. Revenues from the Storage Business Unit, comprising solid-state drive NAND components, totaled $680 million, down 41% year over year and 24% sequentially.
Operating Details
Micron’s non-GAAP gross profit of $934 million slumped 74.2% year over year and 65.1% sequentially. The non-GAAP gross margin of 22.9% reflects a significant decline from the year-ago quarter’s 47% and 40.3% in the fourth quarter of fiscal 2022.
Micron’s non-GAAP operating loss of $65 million compared unfavorably with non-GAAP operating income of $2.73 billion in the prior year quarter and $1.67 billion in the previous quarter. The non-GAAP operating margin declined to negative 1.6% from the year-earlier quarter’s 35.4% and the previous quarter’s 25%.
The non-GAAP operating expenses came in at $999 million compared with the previous quarter’s $1.01 billion and the year-ago quarter’s $891 million.
During fiscal 2023 first-quarter, adjusted EBITDA was $1.8 billion.
Balance Sheet & Cash Flow
Micron exited the reported quarter with cash and investments of $12.08 billion compared with the $11.06 billion recorded at the end of the prior quarter. It ended the quarter with total liquidity of $14.6 billion compared with the $13.6 billion witnessed at the end of the fourth quarter of fiscal 2022.
Micron’s long-term debt as of Dec 1, 2022 was $10.09 billion compared with the $6.80 billion witnessed at the end of the fiscal 2022 fourth quarter.
The company generated an operating cash flow of $943 million during the fiscal first quarter and an adjusted free cash flow of negative $1.53 billion. MU repurchased stock worth $425 million and paid approximately $126 million in dividends.
Micron announced that its board approved a quarterly cash dividend of 115 cents per share payable on Jan 19, 2023 to the shareholders of record as of Jan 3.
Outlook
Micron provided guidance for the second quarter of fiscal 2023. The company anticipates revenues of $3.80 billion (+/-$200 million) for the fiscal second quarter. The Zacks Consensus Estimate stands at $3.77 billion.
For the fiscal first quarter, MU projects a non-GAAP gross margin of 8.5% (+/-250 basis points). Operating expenses on a non-GAAP basis are estimated at $945 million (+/-$15 million).
The adjusted loss per share is anticipated at 62 cents (+/-10 cents). The consensus mark is pegged at 30 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -88.34% due to these changes.
VGM Scores
Currently, Micron has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Micron has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Micron (MU) Up 14% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Micron (MU - Free Report) . Shares have added about 14% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Micron due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Micron Q1 Earnings & Revenues Miss Expectations, Fall Y/Y
Micron kicked off fiscal 2023 on a very disappointing note as the company’s fiscal first-quarter earnings and revenues declined on a year-over-year basis.
Micron reported a non-GAAP loss of 4 cents per share, which missed the Zacks Consensus Estimate of a loss of 2 cents. The bottom line compared unfavorably with the prior-year quarter’s earnings of $2.16 per share.
Quarterly revenues of Micron plunged 46.8% year over year to $4.09 billion, which missed the consensus mark of $4.08 billion. The company cited rapidly weakening consumer demand and substantial customer inventory adjustments across end markets amid macroeconomic uncertainty as the reasons behind the dismal quarterly performance.
Q1 Top-Line Details
Dynamic random access memory revenues of $2.83 billion, accounting for 69% of the total revenues in the fiscal first quarter, declined 49% year over year and 41% sequentially. Bit shipments decreased approximately in the mid-20 percentage sequentially while average selling price (ASP) plunged in the low-20 percentage on a quarter-over-quarter basis.
NAND revenues of $1.10 billion, representing 27% of the total top line, were down 41% on a year-over-year basis and 35% quarter over quarter. While NAND ASP decreased in the low-20 percentage sequentially, bit shipments declined in the low-teens percentage range.
Other revenues were 4% of total revenues at $153 million in the reported quarter.
Segment-wise, revenues of $1.75 billion from the computing and networking business unit plunged 49% from the year-ago quarter and 40% sequentially. Revenues of $655 million from the Mobile Business Unit declined 66% on a year-over-year basis and 57% on a quarter-over-quarter basis.
Embedded Business Unit’s revenues logged in $1 billion, down 18% from the year-ago period and 23% from the previous quarter. Revenues from the Storage Business Unit, comprising solid-state drive NAND components, totaled $680 million, down 41% year over year and 24% sequentially.
Operating Details
Micron’s non-GAAP gross profit of $934 million slumped 74.2% year over year and 65.1% sequentially. The non-GAAP gross margin of 22.9% reflects a significant decline from the year-ago quarter’s 47% and 40.3% in the fourth quarter of fiscal 2022.
Micron’s non-GAAP operating loss of $65 million compared unfavorably with non-GAAP operating income of $2.73 billion in the prior year quarter and $1.67 billion in the previous quarter. The non-GAAP operating margin declined to negative 1.6% from the year-earlier quarter’s 35.4% and the previous quarter’s 25%.
The non-GAAP operating expenses came in at $999 million compared with the previous quarter’s $1.01 billion and the year-ago quarter’s $891 million.
During fiscal 2023 first-quarter, adjusted EBITDA was $1.8 billion.
Balance Sheet & Cash Flow
Micron exited the reported quarter with cash and investments of $12.08 billion compared with the $11.06 billion recorded at the end of the prior quarter. It ended the quarter with total liquidity of $14.6 billion compared with the $13.6 billion witnessed at the end of the fourth quarter of fiscal 2022.
Micron’s long-term debt as of Dec 1, 2022 was $10.09 billion compared with the $6.80 billion witnessed at the end of the fiscal 2022 fourth quarter.
The company generated an operating cash flow of $943 million during the fiscal first quarter and an adjusted free cash flow of negative $1.53 billion. MU repurchased stock worth $425 million and paid approximately $126 million in dividends.
Micron announced that its board approved a quarterly cash dividend of 115 cents per share payable on Jan 19, 2023 to the shareholders of record as of Jan 3.
Outlook
Micron provided guidance for the second quarter of fiscal 2023. The company anticipates revenues of $3.80 billion (+/-$200 million) for the fiscal second quarter. The Zacks Consensus Estimate stands at $3.77 billion.
For the fiscal first quarter, MU projects a non-GAAP gross margin of 8.5% (+/-250 basis points). Operating expenses on a non-GAAP basis are estimated at $945 million (+/-$15 million).
The adjusted loss per share is anticipated at 62 cents (+/-10 cents). The consensus mark is pegged at 30 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -88.34% due to these changes.
VGM Scores
Currently, Micron has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Micron has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.