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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 $60.19, marking a +1.93% move from the previous day. The stock outpaced the S&P 500's daily gain of 1.01%. Meanwhile, the Dow gained 0.66%, and the Nasdaq, a tech-heavy index, added 1.43%.

Heading into today, shares of the maker of chipmaking equipment had lost 3.09% over the past month, lagging the Computer and Technology sector's gain of 2.89% and the S&P 500's gain of 0.19% in that time.

AMAT will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.92, up 13.58% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.10 billion, up 9.26% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.77 per share and revenue of $16.65 billion. These totals would mark changes of +24.01% and +13.98%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for AMAT. 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.

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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. AMAT is currently a Zacks Rank #3 (Hold).

In terms of valuation, AMAT is currently trading at a Forward P/E ratio of 15.65. This valuation marks a discount compared to its industry's average Forward P/E of 20.4.

We can also see that AMAT currently has a PEG ratio of 1.91. 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 was holding an average PEG ratio of 1.91 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 9, putting it in the top 4% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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