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

Zacks Equity Research
Paychex (PAYX) closed at $67.94 in the latest trading session, marking a -0.13% move from the prior day.

Applied Materials (AMAT) closed the most recent trading day at $39.04, moving -0.4% from the previous trading session. The stock lagged the S&P 500's daily gain of 0.13%. Elsewhere, the Dow gained 0.61%, while the tech-heavy Nasdaq lost 0.08%.

Prior to today's trading, shares of the maker of chipmaking equipment had lost 10.44% over the past month. This has lagged the Computer and Technology sector's gain of 1.4% and the S&P 500's gain of 2.1% in that time.

Investors will be hoping for strength from AMAT as it approaches its next earnings release, which is expected to be November 15, 2018. On that day, AMAT is projected to report earnings of $0.96 per share, which would represent year-over-year growth of 3.23%. Our most recent consensus estimate is calling for quarterly revenue of $4 billion, up 0.85% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.42 per share and revenue of $17.24 billion, which would represent changes of +36% and +18.61%, respectively, from the prior 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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% higher within the past month. AMAT currently has a Zacks Rank of #3 (Hold).

Investors should also note AMAT's current valuation metrics, including its Forward P/E ratio of 8.87. Its industry sports an average Forward P/E of 11.17, so we one might conclude that AMAT is trading at a discount comparatively.

Investors should also note that AMAT has a PEG ratio of 0.8 right now. 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. The Semiconductor Equipment - Wafer Fabrication was holding an average PEG ratio of 1.14 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 23, putting it in the top 9% 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.

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


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