Applied Materials (AMAT) Outpaces Stock Market Gains: What You Should Know
Applied Materials (AMAT) closed at $55.72 in the latest trading session, marking a +1.18% move from the prior day. This move outpaced the S&P 500's daily gain of 0.41%. Meanwhile, the Dow gained 0.57%, and the Nasdaq, a tech-heavy index, added 0.7%.
Coming into today, shares of the maker of chipmaking equipment had gained 5.6% in the past month. In that same time, the Computer and Technology sector gained 2.38%, while the S&P 500 gained 2.04%.
Wall Street will be looking for positivity from AMAT as it approaches its next earnings report date. On that day, AMAT is projected to report earnings of $0.76 per share, which would represent a year-over-year decline of 21.65%. Our most recent consensus estimate is calling for quarterly revenue of $3.69 billion, down 8.08% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3 per share and revenue of $14.53 billion. These totals would mark changes of -32.58% and -15.8%, respectively, from last year.
Any recent changes to analyst estimates for AMAT should also be noted by investors. 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. 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. The Zacks Consensus EPS estimate has moved 0.12% higher within the past month. AMAT currently has a Zacks Rank of #4 (Sell).
In terms of valuation, AMAT is currently trading at a Forward P/E ratio of 18.35. Its industry sports an average Forward P/E of 24.69, so we one might conclude that AMAT is trading at a discount comparatively.
It is also worth noting that AMAT currently has a PEG ratio of 3.67. 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. The Semiconductor Equipment - Wafer Fabrication industry currently had an average PEG ratio of 2.86 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 45, putting it in the top 18% 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.
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