What To Expect From Micron’s Earnings (NASDAQ: MU)

Investors seeking opportunities in the technology sector might want to pay closer attention to Micron Technology (NASDAQ: MU). This company, known for manufacturing and marketing memory and storage solutions, has been showing signs of a strong buy due to improved operating results and potential growth spurred by an upswing in the memory cycle.

Micron's stock is trading up 10% on a YTD basis, having pulled back more than 40% from June highs. The dip happened despite MU beating on earnings last time around, with guidance on upcoming quarters doing the damage. So what are markets expecting from Micron this time around?

Earnings per share (EPS) are expected at more than double the previous quarter, with the consensus of $1.11 setting the bar considerably higher than the $0.53 expected last time around. Revenues are expected to come in at $7.64BN, also reflecting solid growth from the previous quarter ($6.67BN expected, $6.81BN actual).

Micron Technology has recently been operating under favourable conditions. The demand for DRAM and NAND, the core products of Micron, has been solid, with a steady increase in the adoption of memory-intensive applications such as cloud computing, artificial intelligence, and the Internet of Things (IoT). This has led to improved revenue and profitability for the company.

Additionally, Micron has been focusing on operational efficiency, which has resulted in better cost control and margin expansion. Its investment in cutting-edge technology and next-generation products positions the company well to benefit from future demand increases.

The memory industry is cyclic at its core, and with signs indicating we are on the cusp of an upswing, Micron Technology is poised to reap the benefits. During such upswings, pricing power typically improves for memory manufacturers, which can lead to increased earnings and cash flow for companies like Micron.

Furthermore, Micron's valuation metrics suggest that the stock is currently undervalued compared to its peers and historical averages. This implies an attractive entry point for investors, with the potential for significant capital appreciation as the market corrects this undervaluation.

However, potential investors should be aware of the risks associated with this sector, including the impact of global economic conditions on consumer and enterprise demand for memory and storage products. Moreover, competition in the industry remains high, with several major players vying for market share. The expectations on Micron have historically been set very high, and the slightest indication of an underperformance has been met with firmly.

With Micron's earnings coming on Weds (25th Sept), time will soon tell how the company has executed on their plans.