Key Points
Micron changed its guidance today, raising forecasts for revenue and profit.
The company earned only $0.70 last year per share, but could earn more than $8 this year.
Micron’s free cash flow continues to lag reported net income.
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Micron (NASDAQ: MU) updated investors this morning with new guidance for its fiscal Q4 2025, which is currently underway.
Shares of the semiconductor stock jumped 2.5% through 12:15 p.m. ET in response.
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What’s Micron earning in Q4?
Previously, Micron had told investors it would collect $10.7 billion in Q4 revenue, plus or minus $300 million — so $11 billion max. Now, the company says it will beat that number, aiming for $11.2 billion, and potentially as much as $11.3 billion, and certainly more than $11 billion.
Gross profit margins earned are also inching higher, with 43.5% the target instead of a previous guess of 41%. As a result, Micron is boosting its bottom-line forecast.
Instead of $2.14 to $2.44, management says the company could earn from $2.57 to $2.71 per share. That’s an extra $0.35 per share in profit.
Management — understandably — tooted its own horn a bit, crediting “improved pricing, particularly in DRAM” for the extra earnings it expects to make, but also “strong execution.”
Is Micron stock a buy now?
Once analysts get around to adding the extra $0.35 to their forecasts, it should raise consensus estimates to $8.17 for this year’s Micron earnings per share. On a $122 share price, that works out to a P/E ratio of about 15 — not a very high multiple for a stock that’s now expecting to grow full-year earnings 600% year over year!
All this said, Micron hasn’t yet stated what its free cash flow for the year might be, and right now, it’s FCF that’s Micron’s Achilles’ heel (it’s running about one-third of reported net income). Speaking personally, I’m going to wait and see that number before deciding to change my mind and declare Micron stock a buy.
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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.
