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Applied Materials (AMAT) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Applied Materials (AMAT) closed at $51.25, marking a +1.49% move from the previous day. This move outpaced the S&P 500's daily gain of 1.15%. Meanwhile, the Dow gained 0.89%, and the Nasdaq, a tech-heavy index, added 1.42%.

Wall Street will be looking for positivity from AMAT as it approaches its next earnings report date. This is expected to be May 14, 2020. On that day, AMAT is projected to report earnings of $0.92 per share, which would represent year-over-year growth of 31.43%. Our most recent consensus estimate is calling for quarterly revenue of $4.25 billion, up 20% from the year-ago period.

AMAT's full-year Zacks Consensus Estimates are calling for earnings of $3.74 per share and revenue of $17.01 billion. These results would represent year-over-year changes of +23.03% and +16.45%, respectively.

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. 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 1.4% lower. AMAT currently has a Zacks Rank of #3 (Hold).

In terms of valuation, AMAT is currently trading at a Forward P/E ratio of 13.49. This valuation marks a discount compared to its industry's average Forward P/E of 20.76.

It is also worth noting that AMAT currently has a PEG ratio of 1.24. 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. AMAT's industry had an average PEG ratio of 1.24 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 161, which puts it in the bottom 37% 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.

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


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