Chip Stock Facing Off With Key Trendlines

Micron will report earnings on September 28 after the close

facebook twitter linkedin

The last time we checked in with chipmaker Micron Technology, Inc. (NASDAQ:MU), the stock was sliding after a bear note. Now, a month later, MU is down 1.3% to trade at $73.40 today, but has filled that bear gap from mid-August. Now, with earnings two weeks away, it's time to revisit Micron's technical backdrop.

Micron has a mixed history of post-earnings reactions. The stock shed 5.7% after the company's quarterly report in July, but gapped higher by 4.8% back in April. Overall, MU averages a post-earnings move of 5.5%, regardless of direction, in the last eight quarters. 

MU is up 61% year-over-year, but is battling its year-to-date breakeven level. Several descending moving averages loom above the shares right now, while 16 of the 21 brokerages in coverage maintain "strong buy" ratings, with zero "sells" on the books. Moreover, Micron Technology stock offers a forward dividend of $0.10 and a dividend yield of 0.14%.

From a fundamental point of view, Micron Technology stock has an intriguing valuation. MU trades at a price-earnings ratio of 20.52, which isn’t bad for a tech company with a market cap of $83.7 billion. Micron stock also has an amazing forward price-earnings ratio of 7.00, signaling a considerable expected increase in earnings. However, Micron Technology hasn’t performed well in recent years, experiencing a 29% decrease in revenues and an 81% decline in net income between fiscal 2018 and fiscal 2020.

Nonetheless, Micron Technology has begun to show strong signs of an ongoing recovery, with its trailing 12-month revenues up 19% and its trailing 12-month net income increasing 54% compared to fiscal 2020. In addition, MU has a solid balance sheet with $8.35 billion in cash and $7.28 billion in total debt, facilitating the company's recovery and making Micron stock a potential value play ahead of earnings.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners