I’ve had June 20 circled on my calendar in anticipation of this moment. My favorite memory chip maker just reported stunning sales and earnings growth for the third quarter. On an otherwise down day for the market, MU shares are moving higher. That’s no small feat, given that MU has nearly doubled in value over the past year.
However, can Micron keep up the winning streak? Let’s find out, in today’s blog.
For those of you who haven’t heard of it, Micron Technology, Inc. (MU) is one of today’s largest producers of memory chips in the world. It had humble beginnings, starting out as a four-person semiconductor company nearly 40 years ago in Boise, Idaho. However, it didn’t take long for Micron to make its mark—just a few years after it was founded, Micron created the world’s smallest 256K dynamic random-access memory (DRAM).
Nowadays, Micron Technology employs more than 30,000 people worldwide, and brings in over $20 billion in annual sales. Its sells DRAM products for data storage and retrieval (including high-speed and high-bandwidth) as well as specialty DRAM products. Micron’s products are used in computers, servers, tablets, mobile phones, communication equipment and much more.
And as I write this, Micron is making headlines with its third-quarter report. Compared with the year ago quarter, the company’s profit line more than doubled, to $3.82 billion, or $3.10 per share.
Excluding special items, adjusted earnings rose 11.7% year-over-year to $3.9 billion, or $3.15 per share. Meanwhile, sales jumped 40% year-over-year to $7.8 billion. Analysts were forecasting $3.12 adjusted EPS on $7.75 billion in revenue, so Micron Technology posted modest sales and earnings surprises.
Better yet, Micron released an upbeat fourth-quarter forecast. Micron is projecting adjusted earnings of $3.23 to $3.37 per share, on revenue of $8 billion to $8.4 billion. This translates to between 59.9% and 61.9% annual earnings growth and between 30.3% and 36.8% annual sales growth. Analysts scrambled to revise their estimates higher after the announcement.
Looking ahead, company management stated that it sees "ongoing momentum and healthy industry fundamentals in the fourth quarter to close out an exceptionally strong fiscal 2018."
This was a tremendous report, and I see plenty of upside potential ahead for MU. I recommend this stock in my Growth Investor newsletter, and we’re currently sitting on a nice 131% gain on this position. However, with its stunning track record of beating analysts’ expectations, I expect that it’ll move even higher from here. In the meantime, I consider MU an A-rating Strong Buy.