Micron, Where So-So Earnings Meet Deep Value (MU)

Micron Technology Inc. (NYSE: MU) has just reported its quarterly earnings  for its quarter-end (Sept. 2, not Sept. 30) and the report was not great, but may be good enough considering how the stock performed  going into earnings season.  The DRAM giant posted earnings of $0.32 EPS and sales of $2.49 billion.  Thomson Reuters had estimates of $0.40 EPS and $2.66 billion in revenues.

While lackluster on the surface, this is a value stock now and it may be “good enough” without knowing what its guidance ahead will be.  This also marked its year-end as well and the company generated net income attributable to Micron shareholders of $1.9 billion or $1.85 EPS.  Micron also reported that its cash and investments were $2.9 billion, that it invested approximately $950 million in capital and paid down its debt by $640 million.

We noted declining prices in our most recent TECH VALUE SCREEN, and the company noted, “revenue from sales of DRAM products was 14% lower in the fourth quarter compared to the third quarter due to a 12% drop in unit sales volume and a slight decrease in average selling prices.”

Perhaps more important than some of the metrics is the note that Micron signed a 10-year cross-license agreement with Samsung, whereby Micron will receive $275 million by March 31.

In case the firm offers up guidance, Thomson Reuters has estimates of $0.38 EPS and $2.70 billion.  As we noted in our TECH VALUE SCREEN we do not have the same assumptions on earnings ahead and already expect lower numbers from the company in the year ahead.  After all, some turnarounds take years and some turnarounds never fully recover.

Micron shares closed up 2.35 at $7.11 today versus a 52-week range of $6.12 to $11.40.  The after-hours session has shares up 1.1% at $7.19.

JON C. OGG