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Applied Materials (AMAT) Gains But Lags Market: What You Should Know

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Zacks Equity Research
·3 min read
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Applied Materials (AMAT) closed at $139.35 in the latest trading session, marking a +0.15% move from the prior day. The stock lagged the S&P 500's daily gain of 0.42%.

Prior to today's trading, shares of the maker of chipmaking equipment had gained 22.17% over the past month. This has outpaced the Computer and Technology sector's gain of 5.45% and the S&P 500's gain of 6.32% in that time.

Investors will be hoping for strength from AMAT as it approaches its next earnings release. The company is expected to report EPS of $1.50, up 68.54% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $5.39 billion, up 36.27% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.98 per share and revenue of $21.68 billion. These totals would mark changes of +43.41% and +26.05%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for AMAT. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.1% higher within the past month. AMAT is holding a Zacks Rank of #2 (Buy) right now.

Looking at its valuation, AMAT is holding a Forward P/E ratio of 23.33. Its industry sports an average Forward P/E of 24.82, so we one might conclude that AMAT is trading at a discount comparatively.

It is also worth noting that AMAT currently has a PEG ratio of 1.69. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Semiconductor Equipment - Wafer Fabrication stocks are, on average, holding a PEG ratio of 1.69 based on yesterday's closing prices.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 70, putting it in the top 28% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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