Why Micron Stock Popped Today
What happened
Shares of computer memory-chip maker Micron Technology (NASDAQ: MU) jumped higher on Wednesday morning, after beating earnings Tuesday night, and were up 2.2% as of 10:20 a.m. ET today.
Heading into the quarter, analysts had forecast Micron would earn $1.97 per share on $7.5 billion in sales for its fiscal second quarter of 2022. In fact, it earned $2.14 per share on sales of $7.8 billion.
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So what
Micron grew its quarterly revenue 25% year over year in the second quarter, and the gross profit margin earned on that revenue zoomed more than 20 full percentage points higher to 47.2%.
Despite rising operating costs, the huge improvement in both revenue and gross profit margin resulted in a big increase in operating profit margin, nearly triple what Micron earned a year ago at 32.7%. Operating profits nearly quadrupled to $2.5 billion, as did net income at $2.3 billion.
On a per-share basis, Micron earned $2, nearly four times what it earned in the year-ago quarter.
Now what
And the good news should only get better in the third quarter. In new guidance, Micron advised investors to look for revenue of $8.7 billion. Although the final figure could differ from that forecast by plus or minus $200 million, anything in the neighborhood of $8.7 billion will be much more than the $8.1 billion quarter that Wall Street has been forecasting for Micron -- an easy sales beat.
Similarly, Micron sees third-quarter earnings coming in near $2.33 per share, plus or minus $0.10. That's well in excess of the $2.21 that Wall Street has been expecting. And Micron's earnings forecast is for actual GAAP profits, rather than Wall Street's more lenient non-GAAP earnings standard.
Long story short, it was a beat-and-raise quarter for Micron, and investors are right to be happy.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
