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

Zacks Equity Research

Lam Research (LRCX) closed the most recent trading day at $198.47, moving +0.12% from the previous trading session. This change outpaced the S&P 500's 0.62% loss on the day. At the same time, the Dow lost 0.25%, and the tech-heavy Nasdaq lost 0.74%.

Heading into today, shares of the semiconductor equipment maker had gained 7.76% over the past month, outpacing the Computer and Technology sector's gain of 3.47% and the S&P 500's gain of 2.8% in that time.

LRCX will be looking to display strength as it nears its next earnings release, which is expected to be July 31, 2019. The company is expected to report EPS of $3.40, down 35.97% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.35 billion, down 24.82% from the prior-year quarter.

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

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Within the past 30 days, our consensus EPS projection has moved 0.19% lower. LRCX is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, LRCX is currently trading at a Forward P/E ratio of 13.75. Its industry sports an average Forward P/E of 16.19, so we one might conclude that LRCX is trading at a discount comparatively.

Meanwhile, LRCX's PEG ratio is currently 1.15. 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. Semiconductor Equipment - Wafer Fabrication stocks are, on average, holding a PEG ratio of 2.3 based on yesterday's closing prices.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 185, which puts it in the bottom 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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