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

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In the latest trading session, Applied Materials (AMAT) closed at $138.48, marking a +0.04% move from the previous day. This move lagged the S&P 500's daily gain of 0.24%.

Heading into today, shares of the maker of chipmaking equipment had gained 1.64% over the past month, lagging the Computer and Technology sector's gain of 2.93% and the S&P 500's gain of 4.09% in that time.

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 $1.76 per share, which would represent year-over-year growth of 66.04%. Our most recent consensus estimate is calling for quarterly revenue of $5.92 billion, up 34.7% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.55 per share and revenue of $22.65 billion, which would represent changes of +57.07% and +31.67%, respectively, from the prior year.

Any recent changes to analyst estimates for AMAT should also be noted by investors. Recent revisions tend to reflect the latest 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.32% higher. AMAT is holding a Zacks Rank of #2 (Buy) right now.

Looking at its valuation, AMAT is holding a Forward P/E ratio of 21.14. This valuation marks a premium compared to its industry's average Forward P/E of 20.45.

It is also worth noting that AMAT currently has a PEG ratio of 1.18. 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. Semiconductor Equipment - Wafer Fabrication stocks are, on average, holding a PEG ratio of 1.18 based on yesterday's closing prices.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 66, which puts it in the top 26% 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.

To follow AMAT in the coming trading sessions, be sure to utilize Zacks.com.


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