Shares in Micron Technology (NASDAQ: MU) stock plunged 11.1% in Friday trading to close the day at $ 443.21. Surprisingly, this plunge came after Micron reported Thursday that it had beaten earnings expectations – not missing them.
Micron reported a fourth quarter tax profit of $ 0.49 per share, calculated in accordance with Approved Accounting Principles (GAAP), and said its "non-GAAP net income" was $ 0.56 per share, up front Wall Street predicted $ 0.49 pro forma profit. Sales of $ 4.9 billion also exceeded expectations of sales of $ 4.6 billion.
That's the good news; now here's the bad. Sales may have exceeded expectations, but were still down 42% from fiscal Q4 201
What really seems to have disturbed the market today was not the decline in earnings year over year, and certainly not the fact that the decline was less than expected – it was the guide to what to expect in fiscal Q1 2020, which is currently underway.
Micron management warned that Q1 sales would probably be close to $ 5 billion (plus or minus $ 200 million), with GAAP earnings of $ 0.42 per share (plus or minus 0, $ 07) and non-GAAP earnings of $ 0.46 per share (also plus or minus $ 0.07). However, Wall Street analysts had projected lower revenue ($ 4.8 billion) but higher profits of $ 0.48, pro forma.
Apparently, the prospects of Micron turning on sales but earning lower profit margins on sales and consequently making less profit triggered today's sales. However, if that is the case, I would just suggest that the strength of Micron's sales may be the most important number to focus on, and the possibility – not the certainty – that Micron could potentially "lose earnings" by a few pennies. is nothing to panic over.
With a low five times subsequent earnings, the Micron stock is still a really, really cheap technical stock.