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Cree (CREE) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Boyd (BYD) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Cree (CREE) closed the most recent trading day at $63.67, moving +1.74% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.35%. At the same time, the Dow added 0.03%, and the tech-heavy Nasdaq gained 0.7%.

Heading into today, shares of the maker of energy-efficient lighting had gained 16.23% over the past month, outpacing the Computer and Technology sector's gain of 6.69% and the S&P 500's gain of 5.14% in that time.

CREE will be looking to display strength as it nears its next earnings release, which is expected to be May 1, 2019. 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 $274.74 million, down 22.82% from the year-ago period.

CREE's full-year Zacks Consensus Estimates are calling for earnings of $0.78 per share and revenue of $1.38 billion. These results would represent year-over-year changes of +310.53% and -7.29%, respectively.

Investors might also notice recent changes to analyst estimates for CREE. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 3.4% higher. CREE is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note CREE's current valuation metrics, including its Forward P/E ratio of 80.06. This represents a premium compared to its industry's average Forward P/E of 14.94.

Meanwhile, CREE's PEG ratio is currently 4. 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 - Discretes was holding an average PEG ratio of 1.01 at yesterday's closing price.

The Semiconductor - Discretes industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 99, putting it in the top 39% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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