Will Micron (MU) miss this earnings season?

Micron Technology Inc. (MU) is scheduled to announce its results for the second quarter of fiscal year 2014 on April 3, 2014. The company recorded a positive surprise of 79.07% in the last quarter. In two of the last four quarters, the company surprised with positive results, the average result of which was 20.93%. Let’s see how things go with this announcement.

Takes into account the last quarter

Micron is benefiting from the growing demand for SSD products and has made significant investments to introduce innovative SSD products to meet the pent-up demand.

Moreover, Micron continues to innovate in memory technologies, including DRAM, NAND and NOR Flash memory solutions, which are widely used in the latest mobile computing devices, as well as in consumer, networking and embedded products.

Additionally, we believe that the acquisitions of Rexchip and Elpida will allow us to increase our share in the memory market. It also brought about the takeover of Elpida Apple Inc. (AAPL) to the customer list, which has a positive impact on future development.

However, competition from companies such as SanDisk (SNDK), SK Hynix and Fusion-io remain concerns.

Whispers about earnings?

Our proven model doesn’t clearly show that Micron is likely to beat earnings this quarter. That’s because for this to happen, a stock must have both a positive Earnings ESP and a Zacks Rank of 1, 2 or 3. That’s not the case here, as you’ll see below.

Zacks ESP: The Zacks ESP is -8.33%. The Most Accurate Estimate is at 55 cents, while the Zacks Consensus Estimate is at 60 cents.

Zacks Rank: Micron’s Zacks Rank #3 (Hold) combined with an ESP of -8.33% makes predicting surprises difficult.

We caution that stocks with Zacks Rank #4 and #5 (stocks rated Sell) should not be included in earnings announcements, especially when the company is experiencing negative estimate revision momentum.

Another company you might consider because our model shows it has the right combination of elements to post record profits is:

Alcoa Inc. (AA), an Earnings ESP of +25.0% and a Zacks Rank #3.

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Read the full research report on AA
Read the full research report on MU

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