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Lam Research (LRCX) Flat As Market Gains: What You Should Know

Zacks Equity Research

Lam Research (LRCX) closed at $210.75 in the latest trading session, marking no change from the prior day. This change lagged the S&P 500's daily gain of 0.74%. At the same time, the Dow added 0.19%, and the tech-heavy Nasdaq gained 1.11%.

Heading into today, shares of the semiconductor equipment maker had gained 13.23% over the past month, outpacing the Computer and Technology sector's gain of 4.95% and the S&P 500's gain of 3.18% in that time.

Investors will be hoping for strength from LRCX as it approaches its next earnings release, which is expected to be July 31, 2019. In that report, analysts expect LRCX to post earnings of $3.40 per share. This would mark a year-over-year decline of 35.97%. Meanwhile, our latest consensus estimate is calling for revenue of $2.35 billion, down 24.82% from the prior-year quarter.

Any recent changes to analyst estimates for LRCX should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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. Within the past 30 days, our consensus EPS projection remained stagnant. LRCX is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, LRCX currently has a Forward P/E ratio of 14.61. This represents a discount compared to its industry's average Forward P/E of 24.32.

We can also see that LRCX currently has a PEG ratio of 1.22. 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 industry currently had an average PEG ratio of 2.46 as of yesterday's close.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 220, putting it in the bottom 15% 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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