Investors Heavy Search Micron Technology, Inc. (MU): Here’s what you need to know

micron (MU) has recently been one of the most searched stocks on Zacks.com. Therefore, you might want to take a look at some of the factors that could shape the performance of the stock in the near future.

Over the past month, shares of this chipmaker have returned +12.3%, compared to the +6.7% change for the Zacks S&P 500 Composite. During this period, the Zacks semiconductor memory industry, to which Micron belongs, grew by 7.5%. Now the important question is, what could be the future direction of the stock?

Although media reports or rumors about a significant change in a company’s business prospects usually cause its stock to trend and lead to an immediate price change, there are always some fundamental factors that ultimately drive the buy-and-hold decision. Huh.

Revision in Income Estimates

Rather than focusing on anything else, we at Zacks prioritize the evaluation of changes in the company’s earnings estimate. This is because we believe the fair value of its stock is determined by the present value of its future earnings stream.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates for a company go up, the fair value of its stock goes up. A higher fair value than the current market price increases investors’ interest in purchasing the stock, driving its price higher. This is why empirical research shows a strong correlation between earnings forecast revisions and trends in near-term stock price movements.

Micron is expected to post earnings of $1.63 per share for the current quarter, representing a year-over-year change of -32.6%. In the past 30 days, the Jacques consensus estimate has changed -41.4%.

Read |  4 different rocket missions set to launch on Thursday

The consensus earnings estimate of $8.52 for the current fiscal year indicates a year-over-year change of +40.6%. This estimate has changed by -10.4% in the last 30 days.

For the next fiscal year, the consensus earnings estimate of $6.31 indicates a change of -25.9%, which is expected to be reported by Micron from a year ago. In the last one month, the estimate has changed by -43.4%.

With an impressive externally audited track record, our proprietary stock rating tool – Zacks Rank – is a more conclusive indicator of a stock’s near-term price performance, as it effectively harnesses the power of earnings forecast revision. Is. The recent change in the size of the consensus estimate along with three other factors related to earnings projections has resulted in Zacks Rank #5 (strong sales) for Micron.

The chart below shows the growth of the company’s forward 12-month consensus EPS estimate:

12 months eps

MU _12MonthEPChartUrl .  EPS Estimates for the 12-Month Consensus

revenue growth forecast

While earnings growth is arguably the best indicator of a company’s financial health, nothing happens if a business is not able to increase its revenue. After all, it’s nearly impossible for a company to grow its earnings for an extended period of time without increasing its revenue. Therefore, it is important to know the potential revenue growth of the company.

In Micron’s case, the consensus sales estimate of $7.21 billion for the current quarter points to a year-over-year turnaround of -12.9%. The estimates for the current and next fiscal years at $31.32 billion and $28.75 billion indicate a change of +3.1% and -8.2%, respectively.

Last reported results and surprising history

Read |  Dodgers News: Latest Debut After Max Scherzer Blasts PitchCom Technology

Micron reported revenue of $8.64 billion last quarter, representing a change of +16.4% year-over-year. EPS of $2.59 for the same period as compared to $1.88 a year ago.

Reported revenue represented a surprise of -0.22%, compared to the Jacques consensus estimate of $8.66 billion. The surprise EPS was +6.15%.

The company outperformed consensus EPS estimates in each of the last four quarters. The company topped consensus revenue estimates by three times during the period.

Evaluation

No investment decision can be efficient without considering the valuation of the stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and a company’s growth prospects is an essential determinant of its future price performance.

When comparing the current values ​​of a company’s valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), consider your own With historical values ​​helping to determine whether its stock is significantly undervalued, overvalued, or undervalued, comparing a company relative to its peers on these parameters gives a good sense of the reasonableness of a stock’s price. Meets.

As part of the Jacques Style Score System, the Jacques Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C). better; and so on), is helpful in identifying whether a stock is overvalued, given a fair value, or temporarily undervalued.

Micron has been rated A on this front, indicating that it is trading at a discount to its peers. Click here to view the values ​​of some of the assessment metrics that govern this grade.

Read |  NHS launches 'life-changing' technology to help millions of Britons in deadly condition

conclusion

The facts discussed here and a lot of other information on Zacks.com can help determine whether it’s worth paying attention to the market discussion about Micron. However, its Jax Rank #5 suggests that it could undermine the broader market in the near term.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 220 elite stocks from their current list of 7 Jax Rank #1 strong buys. They consider these tickers to be “Most Like for Early Price Pops”.

Since 1988, the entire inventory has outperformed the market more than 2 times, with an average profit of 24.8% per annum. So be sure to give these hand-picked 7 your immediate attention.

View them now >>

Click to get this free report

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

Click here to read this article on Zacks.com.

The views and opinions expressed here are the views and opinions of the author and do not necessarily represent those of Nasdaq, Inc.

Source link