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Lam Research (LRCX) Gains But Lags Market: What You Should Know

Zacks Equity Research
Okta (OKTA) closed at $138.66 in the latest trading session, marking a +0.46% move from the prior day.

Lam Research (LRCX) closed the most recent trading day at $180.17, moving +0.6% from the previous trading session. This move lagged the S&P 500's daily gain of 0.72%. Meanwhile, the Dow gained 0.55%, and the Nasdaq, a tech-heavy index, added 0.71%.

Coming into today, shares of the semiconductor equipment maker had lost 0.28% in the past month. In that same time, the Computer and Technology sector gained 2.41%, while the S&P 500 gained 0.28%.

Investors will be hoping for strength from LRCX as it approaches its next earnings release. On that day, LRCX is projected to report earnings of $3.38 per share, which would represent a year-over-year decline of 29.44%. Our most recent consensus estimate is calling for quarterly revenue of $2.40 billion, down 16.92% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $13.89 per share and revenue of $9.57 billion. These totals would mark changes of -22.27% and -13.58%, respectively, from last year.

Any recent changes to analyst estimates for LRCX should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.06% lower within the past month. LRCX is currently a Zacks Rank #3 (Hold).

In terms of valuation, LRCX is currently trading at a Forward P/E ratio of 12.89. For comparison, its industry has an average Forward P/E of 13.41, which means LRCX is trading at a discount to the group.

It is also worth noting that LRCX currently has a PEG ratio of 1.07. 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 1.32 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 219, 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.

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


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