SanDisk Corp. (NASDAQ: SNDK) will be among the chip giants to report its second-quarter earnings results on Wednesday after the closing bell. Its stock has been struggling, down almost half from its 52-week highs. The question is whether you have seen the last earnings or guidance disappointment.
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The consensus analyst estimates from Thomson Reuters call for earnings per share (EPS) of $0.33 and $1.2 billion in revenue. That estimate is a penny lower than a week ago. Also worth consideration, and why you can see why the drop has been so bad, is that the report a year ago was $1.41 in EPS and $1.63 billion in revenue.
SanDisk is the independent leader in NAND and flash memory, but it remains under pressure due to customer losses.
Can SanDisk again be considered a value stock? If it can get back to $4.31 EPS in 2016 (versus $5.60 EPS in 2014), then SanDisk is currently valued at only about 12.5 times expected 2016 EPS. Whether that occurs remains to be seen, and the consensus estimate is $2.76 EPS for 2016, giving it an expected current year price-to-earnings (P/E) ratio of almost 20.
Back in April, earnings came in just below estimates, but that was not what sank the boat. SanDisk has turned into a habitual warner against future earnings and revenues. Even a month prior to the first quarter, the EPS estimate was $0.26 above the final estimate.
Going forward, SanDisk’s top priorities for 2015 are to strengthen its product road map and rebuild its momentum across the business.
Shares of SanDisk were at $54.12 ahead of earnings. It has a consensus price target of $68.60 (down from $69.48 just last Friday), and the stock has a 52-week trading range of $53.18 to $106.64.
If you want to see just how bad things have gotten for SanDisk shares, the 50-day moving average is up at $62.74, and the 200-day moving average is over $20 higher, all the way up at $78.70.
The big concern here for SanDisk is that any continued bad news may generate new 52-week lows.
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