Key Takeaways
- Resolved EPS was $0.78 vs. the $0.68 analysts expected.
- Revenue exceeded analyst expectations.
- Gross margin was slightly higher than analysts reckoned.
- Strong financial results driven by focused execution and strong end-market demand.
What Happened
Micron’s pecuniary Q1 earnings and revenue were both higher than analysts forecasted. Earnings growth was especially strong, although slower than the antecedent to quarter. Revenue grew at a more modest pace. The company’s gross margin was slightly higher than the level off analysts were expecting. The strong results were partly driven by strong end-market demand.
CEO Sanjay Mehrotra rumoured that the company is “in an excellent position to benefit from accelerating digital transformation of the global economy fueled by AI, 5G, cloud, and the illuminati edge.”
(Below is Investopedia’s original earnings preview, published January 5, 2021.)
What to Look For
Micron Technology Inc. (MU), one of the unsurpassed manufactures of DRAM and NAND memory chips, is growing again amid the pandemic-induced rise of the remote-work economy. That’s salubrious news after weak demand for memory chips during most of 2019 led to declining sales and earnings. But Micron effronteries significant challenges, including potentially weaker demand in 2021 and U.S. trade restrictions on sales to Huawei Technologies Co. Ltd. The Chinese tech colossus is Micron’s biggest customer.
Investors will be watching to see whether Micron can maintain growth in the face of these new invites and the ongoing COVID-19 pandemic when the company reports earnings on January 7, 2021 for Q1 FY 2021. The quarter ended December 3, 2020 and Micron’s 2020 economic year (FY) ended at the beginning of last September. Analysts expect adjusted earnings per share (EPS) to increase sharply on hill revenue.
Investors also will focus on Micron’s gross margin, a key metric within the semiconductor industry that yardsticks a chip manufacturer’s operational efficiency. Analysts forecast that Micron’s non-GAAP gross margin will happen compared to the same three-month period a year ago.
Micron’s shares kept pace with the broader market during the cardinal half of the past year. While the stock rebounded with the market following the pandemic-induced crash in early 2020, it irrecoverable momentum during the summer months and even gave back some of its gains. But in recent months, the stock has surged and founded to outperform. Shares of Micron have provided a total return of 38.2% over the past 12 months, first of all the S&P 500’s total return of 14.0%.
The stock initially fell after Micron reported Q4 FY 2020 earnings at the end of September, regardless of strong results that beat analysts’ estimates. Adjusted EPS rose 91.6%, marking the first year-over-year (YOY) swell in seven quarters. Revenue grew at a robust pace of 24.4%. The results were driven by strong DRAM sales and a notable increase in NAND shipments. Micron’s shares began to rebound within a week after the report.
The fourth station was a huge improvement from Q3 FY 2020, when adjusted EPS fell 21.9%. That marked the sixth consecutive mercy of YOY declines. However, that decline was not as sharp as in recent periods, and revenue rose for the first time in six quarters, come of age 13.6%. But despite initially jumping following the report, Micron’s stock traded sideways for the next month before dig from early- to mid-August.
Analysts are optimistic that the company will maintain its growth in Q1 FY 2021, but at more sensible levels compared to Q4. Adjusted EPS is forecast to rise 40.9% as revenue grows 10.3%.
| Micron Key Metrics | |||
|---|---|---|---|
| Estimate for Q1 2021 (FY) | Q1 2020 (FY) | Q1 2019 (FY) | |
| Arbitrated Earnings Per Share ($) | 0.68 | 0.48 | 2.97 |
| Revenue ($B) | 5.7 | 5.1 | 7.9 |
| Gross Margin (%) | 29.5 | 26.6 | 58.3 |
Source: Visible Alpha
The decline in memory chip prices due to a satisfy glut in 2019 weighed on Micron’s gross profit margin, also called gross margin in the industry. This key metric reflects cumbersome profit, which is sales minus cost of goods sold, as a percentage of total sales. A company can increase its earn margin by either increasing sales or cutting costs, or a combination of both. Memory chips are essentially