micron (Mu – Free Report) is one of the most searched stocks on Zacks.com these days. So it's worth looking at some facts that could shape the stock's performance in the short term.
Over the past month, the chipmaker's stock has increased +29.4%. In comparison, the Zacks S&P 500 composite index was -0.9% volatile. During this period, the Zacks Semiconductor Memory industry, which includes Micron, gained 30.2%. The key question here is: What is the future direction of the stock price?
While media releases and rumors about significant changes in a company's business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And if a stock's fair value is higher than its current market price, investors will tend to buy the stock, which will cause the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
Micron is expected to post earnings of $0.46 per share for the current quarter, representing a year-over-year change of +132.2%. Over the past 30 days, the Zacks Consensus Estimate has changed +1721.8%.
Consensus earnings estimate of $0.80 for the current year represents a +118% change from the prior year. Over the past 30 days, this estimate has changed by +122.6%.
The consensus earnings estimate for the next fiscal year is $7, representing a +774.5% change from the earnings that Micron was expected to report a year ago. Over the past month, the forecast has changed by +13.8%.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, effectively harnesses the power of earnings estimate revisions to provide a more definitive picture of near-term stock price direction. Provides a complete picture. The magnitude of the recent change in consensus estimates and three other factors related to earnings estimates give Micron a Zacks Rank #2 (Buy).
The chart below shows the evolution of the company's consensus EPS estimate for the next 12 months.
12 months EPS
Revenue growth forecast
Earnings growth is arguably the best indicator of a company's financial health, but nothing will happen if a company can't grow its revenue. After all, it's nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it's important to know a company's earnings growth potential.
For Micron, the current quarter's consensus revenue estimate of $6.62 billion represents a year-over-year change of +76.4%. Forecasts of $24.53 billion and $36.31 billion for the current and next fiscal year represent changes of +57.8% and +48%, respectively.
Last reported results and surprising details
Micron reported revenue of $5.82 billion in its last reported quarter. This represents a year-over-year change of +57.7%. EPS for the same period was $0.42, compared to -$1.91 a year ago.
The reported earnings represent a surprise of +9.25% when compared to the Zacks Consensus Estimate of $5.33 billion. EPS surprise was +255.56%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company beat consensus revenue estimates every time during the period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
The present value 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), and the past value of your company Comparing a company to its peers based on these parameters will help you see how reasonable its stock price is. You can get to know better.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) categorizes stocks into five groups, ranging from A to F, with A being B B is better than C, and so on), and can help identify whether a stock is overvalued, fairly valued, or temporarily undervalued. Masu.
Micron is rated 'F' on this score, indicating that it trades at a premium relative to its industry peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and many others on Zacks.com, may help you decide whether the market buzz surrounding Micron is worth paying attention to. However, the company's Zacks Rank #2 suggests it has the potential to outperform the broader market in the near term.
Infrastructure stock boom sweeping the US
A massive effort to rebuild America's crumbling infrastructure will soon begin. It is bipartisan, it is urgent, and it is inevitable. Trillions of dollars will be spent. Good luck will come your way.
The only question is: Can you get into the right stocks early, when the potential for growth is highest?
Zacks has released a special report to help you do just that. It's free today. Meet five special companies looking to maximize profits from building and repairing roads, bridges, and buildings, as well as freight transportation and energy conversion on an almost unimaginable scale.
Free Download: How to benefit from trillions in infrastructure spending >>
