Continuing the Recent Boom in Memory Chip Companies

One of my favorite memory chip companies reported Q1 2018 earnings yesterday after the closing bell, and between the rise in gaming popularity and the recent boom in cryptocurrencies (and the technology required to mine them), you’d better believe there was some positive news to go around. In today’s blog, we’ll take a look at how you can profit from this company’s stellar report…

Micron Technology Inc. (MU) is one of the largest producers of memory chips in the world. Currently, the company employs 30,000 people worldwide across 20 countries and it brings in over $12 billion in sales each year. MU sells its products to original equipment manufacturers (OEMs) and retailers. Its biggest source of revenues are dynamic random access memory (DRAM) products for data storage and retrieval (including high-speed and high-bandwidth) and specialty DRAM products used in computers, servers, tablets, mobile phones, communication equipment, computer peripherals, industrial, automotive and other electronic devices.

MU revealed earnings and sales results for its first quarter in fiscal year 2018 after the stock market closed on Tuesday. Total sales during the quarter rose 71.4% year-over-year to $6.8 billion, topping analyst estimates of $6.4 billion. Adjusted earnings per share surged a stunning 665.6% to $2.45, up from $0.32 per share in the same quarter a year ago. The analyst community was looking for earnings of $2.21 per share, so in addition to an impressive 6.3% sales surprise, Micron Technology posted a massive 10.9% earnings surprise.

The company noted that it has seen rapidly growing demand for its graphics products, fueled by the increasing popularity of gaming and eSports. And Micron Technology said that while smaller in size, recent interest in cryptocurrency mining has put further pressure on graphics memory supply.

Looking ahead to its second quarter, the memory and storage provider expects revenue between $6.80 billion and $7.20 billion, or 46% to 55% annual sales growth. Also, Micron Technology is looking for adjusted earnings between $2.51 and $2.65 per share, which translates to 179% to 194% annual earnings growth. The company’s second-quarter estimate is above the current consensus estimate, which looks for revenue between $5.6 billion and $6.73 billion, and earnings per share between $1.75 and $2.30.

Thanks to the earnings beat and solid forward-looking guidance, MU shares bounced about 5% in after-hours trading. That’s exactly what I’d expect from a solid A-rated company in Portfolio Grader.

Until tomorrow,

Louis Navellier

Louis Navellier

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