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

Zacks Equity Research
·3 mins read

Applied Materials (AMAT) closed at $58.23 in the latest trading session, marking a +0.76% move from the prior day. The stock lagged the S&P 500's daily gain of 1.6%. At the same time, the Dow added 1.34%, and the tech-heavy Nasdaq gained 2.26%.

Coming into today, shares of the maker of chipmaking equipment had lost 6.84% in the past month. In that same time, the Computer and Technology sector lost 5.8%, while the S&P 500 lost 5.3%.

Investors will be hoping for strength from AMAT as it approaches its next earnings release. On that day, AMAT is projected to report earnings of $1.17 per share, which would represent year-over-year growth of 46.25%. Meanwhile, our latest consensus estimate is calling for revenue of $4.60 billion, up 22.65% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.07 per share and revenue of $17.11 billion. These totals would mark changes of +33.88% and +17.15%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for AMAT. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. AMAT currently has a Zacks Rank of #2 (Buy).

In terms of valuation, AMAT is currently trading at a Forward P/E ratio of 14.21. For comparison, its industry has an average Forward P/E of 15.02, which means AMAT is trading at a discount to the group.

We can also see that AMAT currently has a PEG ratio of 1.12. 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. The Semiconductor Equipment - Wafer Fabrication industry currently had an average PEG ratio of 1.19 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 7, which puts it in the top 3% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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