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

Zacks Equity Research
·3 min read

Applied Materials (AMAT) closed the most recent trading day at $60.33, moving +1.86% from the previous trading session. The stock outpaced the S&P 500's daily gain of 1.23%. Elsewhere, the Dow gained 1.6%, while the tech-heavy Nasdaq added 0.42%.

Heading into today, shares of the maker of chipmaking equipment had lost 2.34% over the past month, lagging the Computer and Technology sector's loss of 1.34% and outpacing the S&P 500's loss of 2.51% in that time.

Wall Street will be looking for positivity from AMAT as it approaches its next earnings report date. The company is expected to report EPS of $1.17, up 46.25% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.60 billion, up 22.65% from the year-ago period.

AMAT's full-year Zacks Consensus Estimates are calling for earnings of $4.08 per share and revenue of $17.11 billion. These results would represent year-over-year changes of +34.21% and +17.15%, respectively.

Any recent changes to analyst estimates for AMAT should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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. 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. The Zacks Consensus EPS estimate has moved 0.2% higher within the past month. AMAT is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that AMAT has a Forward P/E ratio of 14.53 right now. For comparison, its industry has an average Forward P/E of 15.45, which means AMAT is trading at a discount to the group.

Meanwhile, AMAT's PEG ratio is currently 1.15. 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 was holding an average PEG ratio of 1.15 at yesterday's closing price.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 26, putting it in the top 11% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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