The Zacks Analyst Blog Highlights:Alcoa, Micron Technology, Apple, Spansion and Plexus

CHICAGO, Oct. 9, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Alcoa (NYSE:AA-Free Report), Micron Technology Inc. (Nasdaq:MU-Free Report), Apple (Nasdaq:AAPL-Free Report), Spansion Inc. (NYSE:CODE-Free Report) and Plexus Corp. (Nasdaq:PLXS-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday's Analyst Blog:

Alcoa Beats EPS on Restructuring

Alcoa (NYSE:AA-Free Report) ushered in another quarterly earnings season Tuesday after the bell, posting a big earnings beat on revenues that came in a tad light. A restructuring charge of $0.09 per share brought total EPS in Alcoa's Q3 up to 11 cents -- a 46% positive surprise on the bottom line.

The top line came in at $5.77 billion, down a touch from the Zacks Consensus Estimate of $5.83 billion, which was also the year-ago revenue figure. So the headline will be the EPS home run, but call the whole thing mixed, ultimately.

After-hours traders apparently like what they've seen; following a slightly down day in regular Tuesday trading AA shares are up 14 cents (1.76%) so far after the bell. So back up over $8 per share we go, but we've seen this movie before. It's been several quarters now since AA has cracked $10, and they've been range-bound for quite some time. Alcoa shares are down close to 10% year-to-date.

Restructuring Alcoa's business includes building out the company's value-add businesses, which now make up 57% of its revenues. These value-add businesses include power and propulsion, specialty products, research and development and supply-chain management. The company cited strong operations helping offset weaker aluminum prices in the quarter.

Analysts had provided mixed estimate revisions for Q3 earnings, but nothing too substantial -- they didn't even manage to budge the 6-cent consensus all quarter. For next quarter and next fiscal year (2014), there is currently a downward bias among analysts, with 5 downwardly revised estimates for both over the past 60 days.

Though demand for aluminum on a global scale still looks relatively decent overall, aluminum prices have been coming down noticeably over the past couple quarters. And with the U.S. government now shut down exactly one week, it's not exactly a ringing endorsement for firming up commodity prices going forward, either.

This is also, as everyone knows, Alcoa's first earnings report in more than 50 years where it was not part of the Dow. Apparently, the Industrial Average continues to get a little less "industrial." Further, considering the Zacks Industry Rank for "Mining - Non Ferrous" is a paltry 226 out of 265 industries counted overall, it really should surprise no one that the Dow Jones might be looking for a little more "pop" in their lineup.

And this brings up the rather petty discussion about whether or not Alcoa truly does kick off each new earnings season. I haven't spent much time philosophizing about it, but here's my quick take: nobody ever claimed Dick Clark owned New Year's Eve all those years, but once you saw the man's face on your TV, you knew it was time to get the champagne ready.

Well, get the champagne ready now, folks -- and Happy Q3 Earnings Season!

Is Micron Poised to Beat Earnings?

We expect Micron Technology Inc. (Nasdaq:MU-Free Report) to beat expectations when it reports fourth-quarter 2013 results on Oct 10, 2013. In the last reported quarter, it posted a positive surprise of approximately 33.3%, and we believe that the company will continue with its upbeat performance in this quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Micron is likely to beat earnings because it has the right combination of two key components:

Positive Zacks ESP: Micron currently has a Zacks Earnings ESP of +4.35%. This is because the Most Accurate Estimate stands at 24 cents per share, while the Zacks Consensus Estimate is pegged at 23 cents.

Zacks Rank #1 (Strong Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have higher chances of beating earnings estimates. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Micron's Zacks Rank #1 (Strong Buy) and Earnings ESP of +4.35% makes us confident of a positive earnings beat on Oct 10.

What Is Driving Better-than-Expected Earnings?

Micron's innovations in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.

The other positive factor for Micron is the Elpida acquisition, which is expected to increase the wafer manufacturing capacity by approximately 50%, helping it to capitalize on any demand shortage.

The company is also optimistic about supply/demand balance for DRAM and NAND memory chips in 2013 and 2014, which should support prices. The DRAM market is already seeing supply constraints due to the rising demand for the memory chips by smartphone makers such as Samsung and Apple (Nasdaq:AAPL-Free Report).

We believe that tight expense control (Micron is expected to cut approximately 5% of its 30k strong workforce by fiscal 2014), manufacturing efficiency and the secular shift toward mobile DRAM will benefit Micron's fundamentals in the coming quarters.

Other Stocks to Consider

Apart from Micron, other stocks that are likely to beat earnings estimates in the to-be-reported quarter include:

• Spansion Inc. (NYSE:CODE-Free Report), with Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy)
• Plexus Corp. (Nasdaq:PLXS-Free Report), with Earnings ESP of +1.49% and a Zacks Rank #1 (Strong Buy)

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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