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

Zacks Equity Research

Applied Materials (AMAT) closed at $61.81 in the latest trading session, marking a +1.88% move from the prior day. This move outpaced the S&P 500's daily gain of 0.49%. Elsewhere, the Dow gained 0.28%, while the tech-heavy Nasdaq added 0.43%.

Coming into today, shares of the maker of chipmaking equipment had gained 7.49% in the past month. In that same time, the Computer and Technology sector gained 3.18%, while the S&P 500 gained 2.9%.

Investors will be hoping for strength from AMAT as it approaches its next earnings release. In that report, analysts expect AMAT to post earnings of $0.92 per share. This would mark year-over-year growth of 13.58%. Our most recent consensus estimate is calling for quarterly revenue of $4.10 billion, up 9.26% from the year-ago period.

AMAT's full-year Zacks Consensus Estimates are calling for earnings of $3.77 per share and revenue of $16.65 billion. These results would represent year-over-year changes of +24.01% and +13.98%, respectively.

Investors might also notice recent changes to analyst estimates for AMAT. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Within the past 30 days, our consensus EPS projection remained stagnant. AMAT currently has a Zacks Rank of #1 (Strong Buy).

Digging into valuation, AMAT currently has a Forward P/E ratio of 16.08. This valuation marks a discount compared to its industry's average Forward P/E of 25.09.

Meanwhile, AMAT's PEG ratio is currently 1.96. 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. Semiconductor Equipment - Wafer Fabrication stocks are, on average, holding a PEG ratio of 1.96 based on yesterday's closing prices.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 2, putting it in the top 1% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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