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Applied Materials (AMAT) Gains As Market Dips: What You Should Know

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Applied Materials (AMAT) closed at $106.40 in the latest trading session, marking a +0.4% move from the prior day. This move outpaced the S&P 500's daily loss of 0.28%. Elsewhere, the Dow lost 0.14%, while the tech-heavy Nasdaq lost 0.14%.

Prior to today's trading, shares of the maker of chipmaking equipment had gained 22.85% over the past month. This has outpaced the Computer and Technology sector's gain of 8.21% and the S&P 500's gain of 8.35% in that time.

Investors will be hoping for strength from Applied Materials as it approaches its next earnings release. The company is expected to report EPS of $1.78, down 6.32% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.26 billion, up 0.99% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.43 per share and revenue of $25.46 billion. These totals would mark changes of +8.63% and +10.38%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for Applied Materials. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. The Zacks Consensus EPS estimate has moved 0.76% lower within the past month. Applied Materials currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, Applied Materials is holding a Forward P/E ratio of 14.26. This represents a discount compared to its industry's average Forward P/E of 15.65.

It is also worth noting that AMAT currently has a PEG ratio of 1.71. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor Equipment - Wafer Fabrication industry currently had an average PEG ratio of 1.71 as of yesterday's close.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 175, putting it in the bottom 31% 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.

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


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