Seagate Technology Holdings plc
STX
is scheduled to report fourth-quarter fiscal 2022 earnings on Jul 21.
The company projects fiscal fourth-quarter non-GAAP earnings of $1.90 (+/-20 cents) per share. The Zacks Consensus Estimate for earnings per share has been steady at $1.92, which suggests a decline of 4% from the year-ago quarter’s reported figure.
Seagate expects fiscal fourth-quarter revenues of $2.8 billion (+/- $150 million). The Zacks Consensus Estimate for revenues is pegged at $2.8 billion, which marks a decline of 7% from the year-ago quarter’s reported tally.
Seagate Technology Holdings PLC Price and EPS Surprise
Seagate Technology Holdings PLC price-eps-surprise
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Seagate Technology Holdings PLC Quote
The company surpassed the Zacks Consensus Estimate in the three of last four quarters. It has a trailing four-quarter earnings surprise of 3.2%, on average. In the past year, shares of the company have lost 8% of their value against the
industry
’s decline of 61.8%.
Image Source: Zacks Investment Research
Factors Setting the Tone for Q4
Seagate’s mass storage capacity solutions, especially nearline products, are likely to have witnessed continued momentum driven by strong cloud data center demand and recovery in the enterprise market in the about-to-be-reported quarter.
The company’s mass capacity portfolio is expected to reflect incremental gains from multiple varieties of its 20-terabyte drives in addition to 18-terabyte drives. In the last reported quarter, revenues from mass capacity storage increased 18.8% year over year to $1.9 billion. Nearline revenue surged 24% year over year owing to strong uptake of 18 TB drives and initial shipments of 20 TB drives.
Healthy demand for solid-state drives or SSDs in data centers and increased gaming activities are expected to have lifted sales of gaming SSDs on improving demand from notebooks and video game consoles. This is likely to have favored the top line in the to-be-reported quarter.
Higher uptake of high-definition cameras, longer data retention rates and the implementation of emerging tech like AI and analytics is driving the video and image applications market revenues.
Seagate’s Lyve Cloud business is likely to have seen healthy traction among customers. Lyve Cloud is the company’s storage-as-a-service platform (only S3-compatible) intended primarily to help business organizations manage exponential unstructured data growth. In May 2022, Seagate announced its expansion strategy for its Lyve Cloud, including three new Lyve Cloud regions in the United States (in Dallas, Oklahoma City and Washington DC) and the new regions in Germany, India, Japan and the U.K. These new regions will be complementary to the company’s Singapore Lyve region and the existing regions in the United States, taking the total to 10 regions with 16 availability zones.
However, declining trends witnessed in PC shipments in the second quarter of the calendar year 2022 are likely to have negatively impacted HDD sales in the company’s performance in the quarter under review.
Further, supply chain-induced semiconductor component shortages and logistics bottlenecks and subsequent high costs are likely to have affected the company’s performance in the fiscal fourth quarter. Increasing expenses on product enhancements amid stiff competition in the storage market are likely to have put pressure on the bottom line in the quarter under review.
What the Zacks Model Unveils
Our proven model does not predict an earnings beat for Seagate this time around. The combination of a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Seagate has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter.
Stocks to Consider
Here are some stocks you may consider as our model shows that these have the right combination of elements to beat earnings this season.
SAP SE
SAP
has an Earnings ESP of +2.82% and currently carries a Zacks Rank #2. SAP is slated to release quarterly numbers on Jul 21. You can see
the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SAP’s to-be-reported quarter’s earnings and revenues is pegged at $1.15 per share and $7.68 billion, respectively. SAP surpassed earnings estimates in three of the preceding four quarters, delivering an average surprise of 19.8%. Shares of SAP have lost 39.2% in the past year.
Schlumberger Limited
SLB
has an Earnings ESP of +1.40% and currently has a Zacks Rank #2. Schlumberger is scheduled to report earnings results on Jul 22.
The Zacks Consensus Estimate for Schlumberger’s to-be-reported quarter’s earnings and revenues is pegged at 40 cents per share and $6.27 billion, respectively. Schlumberger surpassed earnings estimates in the preceding four quarters, delivering an average surprise of 6.7%. Shares of SLB have gained 21.2% in the past year.
Halliburton Company
HAL
has an Earnings ESP of +2.73% and currently carries a Zacks Rank of 2. Halliburton is set to announce quarterly figures on Jul 19.
The Zacks Consensus Estimate for Halliburton’s to-be-reported quarter’s earnings and revenues is pegged at 45 cents per share and $4.71 billion, respectively. Halliburton’s surpassed earnings estimates in the preceding four quarters, delivering an average surprise of 6%. Shares of HAL have gained 44% in the past year.
Stay on top of upcoming earnings announcements with the Zacks
Earnings Calendar.
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