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Is Applied Materials (AMAT) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Applied Materials (AMAT). AMAT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 12.53, while its industry has an average P/E of 16.36. Over the past year, AMAT's Forward P/E has been as high as 13.93 and as low as 7.38, with a median of 10.20.

We should also highlight that AMAT has a P/B ratio of 4.72. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 7.62. Over the past year, AMAT's P/B has been as high as 7.57 and as low as 4.17, with a median of 5.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AMAT has a P/S ratio of 2.46. This compares to its industry's average P/S of 3.1.

Finally, we should also recognize that AMAT has a P/CF ratio of 10.06. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. AMAT's P/CF compares to its industry's average P/CF of 17.96. Over the past 52 weeks, AMAT's P/CF has been as high as 15.26 and as low as 7.57, with a median of 9.54.

These are only a few of the key metrics included in Applied Materials's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AMAT looks like an impressive value stock at the moment.


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