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Applied Materials (AMAT) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Applied Materials (AMAT) closed at $61.21 in the latest trading session, marking a -1.59% move from the prior day. This change lagged the S&P 500's daily loss of 0.71%. Elsewhere, the Dow lost 0.81%, while the tech-heavy Nasdaq lost 0.79%.

Coming into today, shares of the maker of chipmaking equipment had gained 11.39% in the past month. In that same time, the Computer and Technology sector gained 7.25%, while the S&P 500 gained 4.77%.

Wall Street will be looking for positivity from AMAT as it approaches its next earnings report date. In that report, analysts expect AMAT to post earnings of $0.92 per share. This would mark year-over-year growth of 13.58%. Our most recent consensus estimate is calling for quarterly revenue of $4.10 billion, up 9.26% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.77 per share and revenue of $16.65 billion, which would represent changes of +24.01% and +13.98%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for AMAT. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. AMAT currently has a Zacks Rank of #1 (Strong Buy).

In terms of valuation, AMAT is currently trading at a Forward P/E ratio of 16.48. This represents a discount compared to its industry's average Forward P/E of 20.62.

It is also worth noting that AMAT currently has a PEG ratio of 2.01. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Semiconductor Equipment - Wafer Fabrication industry currently had an average PEG ratio of 2.01 as of yesterday's close.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 3, which puts it in the top 2% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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