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

Zacks Equity Research

Lam Research (LRCX) closed at $300.76 in the latest trading session, marking a +1.17% move from the prior day. This move outpaced the S&P 500's daily loss of 0.15%. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, lost 0.24%.

Coming into today, shares of the semiconductor equipment maker had gained 4.59% in the past month. In that same time, the Computer and Technology sector gained 7.03%, while the S&P 500 gained 3.88%.

Wall Street will be looking for positivity from LRCX as it approaches its next earnings report date. This is expected to be January 29, 2020. The company is expected to report EPS of $3.82, down 1.29% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.50 billion, down 0.79% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $15.21 per share and revenue of $9.89 billion, which would represent changes of +4.54% and +2.48%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for LRCX. 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.

In terms of valuation, LRCX is currently trading at a Forward P/E ratio of 19.54. Its industry sports an average Forward P/E of 20.56, so we one might conclude that LRCX is trading at a discount comparatively.

Meanwhile, LRCX's PEG ratio is currently 1.44. 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. The Semiconductor Equipment - Wafer Fabrication was holding an average PEG ratio of 2 at yesterday's closing price.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 5, which puts it in the top 2% 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.

To follow LRCX in the coming trading sessions, be sure to utilize Zacks.com.


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