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Cree (CREE) Gains As Market Dips: What You Should Know

Zacks Equity Research
Sonic Automotive (SAH) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues.

In the latest trading session, Cree (CREE) closed at $57.28, marking a +0.61% move from the previous day. This move outpaced the S&P 500's daily loss of 0.01%. At the same time, the Dow lost 0.1%, and the tech-heavy Nasdaq gained 0.12%.

Heading into today, shares of the maker of energy-efficient lighting had gained 9% over the past month, outpacing the Computer and Technology sector's gain of 4.57% and the S&P 500's gain of 2.24% in that time.

CREE will be looking to display strength as it nears its next earnings release. In that report, analysts expect CREE to post earnings of $0.16 per share. This would mark year-over-year growth of 300%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $397.87 million, up 11.77% from the year-ago period.

CREE's full-year Zacks Consensus Estimates are calling for earnings of $0.78 per share and revenue of $1.64 billion. These results would represent year-over-year changes of +310.53% and +9.79%, respectively.

Investors might also notice recent changes to analyst estimates for CREE. 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.68% higher. CREE is currently a Zacks Rank #1 (Strong Buy).

Looking at its valuation, CREE is holding a Forward P/E ratio of 72.68. Its industry sports an average Forward P/E of 10.78, so we one might conclude that CREE is trading at a premium comparatively.

We can also see that CREE currently has a PEG ratio of 3.63. 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. Semiconductor - Discretes stocks are, on average, holding a PEG ratio of 1.01 based on yesterday's closing prices.

The Semiconductor - Discretes industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 9, which puts it in the top 4% 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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