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Why Is Micron (MU) Down Over 6% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Micron Technology Inc. (MU - Free Report) . Shares have lost about 6.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 catalysts.
Micron Tops on Q1 Earnings & Revenues, Guides Strong
Micron reported better-then-expected first-quarter fiscal 2017 results. Adjusted earnings per share (excluding the impact of one-time items but including stock based compensation expense) of $0.28 came ahead of the Zacks Consensus Estimate of $0.24. Also, adjusted earnings increased from the year-ago figure of $0.24 per share.
Quarter Details
Micron’s revenues in the quarter not only increased 18.5% on a year-over-year basis to $3.970 billion, but also surpassed the Zacks Consensus Estimate of $3.784 billion. Also, reported revenues increased on a quarter-over-quarter basis (up 23%), primarily due to pricing improvement in the DRAM and NAND sales volume. Also, a 5% increase in DRAM average selling prices (ASP) supported the revenue growth.
DRAM products accounted for 61% of total revenue during the quarter. DRAM revenues increased 18% on a sequential basis. On the other hand, NAND sales volume increased around 26% quarter over quarter.
Coming to the Storage Business Unit (SBU), revenues of $860 million were up 13% sequentially.
Revenues from the Mobile Business Unit (MBU) increased 25% sequentially and accounted for around 30% of total revenue. The increase was primarily due to a continuous ramp in the Chinese market and strong growth in LPDRAM and mobile NAND product lines.
The computing and networking business (CNBU) saw an 18% sequential increase in revenues to $1.47 billion, primarily due to an increase in 20-nanometer shipment growth across all segments coupled with pricing improvement.
Revenues from the embedded business came in at $578 million, up 13% from the last quarter, primarily due to strength in the automotive and consumer segments.
Micron’s gross profit was up 19.1% on a year-over-year basis to $1.01 billion. Gross margin was 25.5% compared with 25.39% a year ago, primarily due to a strong pricing environment and higher revenue base.
Selling, general and administrative (SG&A) expenses decreased 11.2% year over year to $159 million. Research and development (R&D) expenses were $470 million, up 11.6% on a year-over-year basis. Operating expenses, as a percentage of revenues, decreased 200 basis points on a year-over-year basis to 16.4%.
Micron reported operating income of $359 million compared with $232 million reported in the year-ago quarter. Operating margin increased 211 bps year over year to 9%.
The company reported adjusted net income (excluding the impact of one-time items but including stock based compensation expense) of approximately $289 million compared with $253 million reported in the year-ago period.
On a GAAP basis, the company reported net income of $180 million compared with the year-ago reported net income of $206 million.
The company exited fiscal first quarter with cash and short-term investments of $4.17 billion compared with $4.39 billion in the previous quarter. Receivables were $2.45 billion compared with $2.07 billion in the previous quarter. Micron’s long-term debt decreased to $8.49 billion from $9.15 billion in the prior quarter.
During the quarter, the company generated cash of $1.138 billion. Capital expenditure was $1.18 billion in the first quarter of fiscal 2017.
Guidance
For the second quarter of fiscal 2017, Micron expects revenues in a range of $4.35 billion to $4.7 billion. The company expects earnings per share in the range of $0.58 to $0.68.
Management expects gross margin in a range of 31% to 34% in fiscal second quarter 2017. Operating expenses are expected in a range of $590 million to $640 million and operating income is likely to be within $800 million to $900 million.
Going forward, Micron expects favorable supply and demand dynamics to continue in 2017.
How Have Estimates Been Moving Since Then?
Since the earnings release, the stock has witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter In the past month, the consensus estimate has improved 31.7% due to these changes.
At this time, the stock has a great Growth score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, stocks has an aggregte VGM score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
While estimates have been trending upward for the stock, the magnitude of these revisions looks promising. It comes with little surprise shares of MU have a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Why Is Micron (MU) Down Over 6% Since the Last Earnings Report?
It has been about a month since the last earnings report for Micron Technology Inc. (MU - Free Report) . Shares have lost about 6.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 catalysts.
Micron Tops on Q1 Earnings & Revenues, Guides Strong
Micron reported better-then-expected first-quarter fiscal 2017 results. Adjusted earnings per share (excluding the impact of one-time items but including stock based compensation expense) of $0.28 came ahead of the Zacks Consensus Estimate of $0.24. Also, adjusted earnings increased from the year-ago figure of $0.24 per share.
Quarter Details
Micron’s revenues in the quarter not only increased 18.5% on a year-over-year basis to $3.970 billion, but also surpassed the Zacks Consensus Estimate of $3.784 billion. Also, reported revenues increased on a quarter-over-quarter basis (up 23%), primarily due to pricing improvement in the DRAM and NAND sales volume. Also, a 5% increase in DRAM average selling prices (ASP) supported the revenue growth.
DRAM products accounted for 61% of total revenue during the quarter. DRAM revenues increased 18% on a sequential basis. On the other hand, NAND sales volume increased around 26% quarter over quarter.
Coming to the Storage Business Unit (SBU), revenues of $860 million were up 13% sequentially.
Revenues from the Mobile Business Unit (MBU) increased 25% sequentially and accounted for around 30% of total revenue. The increase was primarily due to a continuous ramp in the Chinese market and strong growth in LPDRAM and mobile NAND product lines.
The computing and networking business (CNBU) saw an 18% sequential increase in revenues to $1.47 billion, primarily due to an increase in 20-nanometer shipment growth across all segments coupled with pricing improvement.
Revenues from the embedded business came in at $578 million, up 13% from the last quarter, primarily due to strength in the automotive and consumer segments.
Micron’s gross profit was up 19.1% on a year-over-year basis to $1.01 billion. Gross margin was 25.5% compared with 25.39% a year ago, primarily due to a strong pricing environment and higher revenue base.
Selling, general and administrative (SG&A) expenses decreased 11.2% year over year to $159 million. Research and development (R&D) expenses were $470 million, up 11.6% on a year-over-year basis. Operating expenses, as a percentage of revenues, decreased 200 basis points on a year-over-year basis to 16.4%.
Micron reported operating income of $359 million compared with $232 million reported in the year-ago quarter. Operating margin increased 211 bps year over year to 9%.
The company reported adjusted net income (excluding the impact of one-time items but including stock based compensation expense) of approximately $289 million compared with $253 million reported in the year-ago period.
On a GAAP basis, the company reported net income of $180 million compared with the year-ago reported net income of $206 million.
The company exited fiscal first quarter with cash and short-term investments of $4.17 billion compared with $4.39 billion in the previous quarter. Receivables were $2.45 billion compared with $2.07 billion in the previous quarter. Micron’s long-term debt decreased to $8.49 billion from $9.15 billion in the prior quarter.
During the quarter, the company generated cash of $1.138 billion. Capital expenditure was $1.18 billion in the first quarter of fiscal 2017.
Guidance
For the second quarter of fiscal 2017, Micron expects revenues in a range of $4.35 billion to $4.7 billion. The company expects earnings per share in the range of $0.58 to $0.68.
Management expects gross margin in a range of 31% to 34% in fiscal second quarter 2017. Operating expenses are expected in a range of $590 million to $640 million and operating income is likely to be within $800 million to $900 million.
Going forward, Micron expects favorable supply and demand dynamics to continue in 2017.
How Have Estimates Been Moving Since Then?
Since the earnings release, the stock has witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter In the past month, the consensus estimate has improved 31.7% due to these changes.
Micron Technology Inc. Price and Consensus
Micron Technology Inc. Price and Consensus | Micron Technology Inc. Quote
VGM Scores
At this time, the stock has a great Growth score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, stocks has an aggregte VGM score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
While estimates have been trending upward for the stock, the magnitude of these revisions looks promising. It comes with little surprise shares of MU have a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.