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Lam Research (LRCX) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Lam Research (LRCX) closed at $311.34 in the latest trading session, marking a +0.86% move from the prior day. This change outpaced the S&P 500's 0.03% gain on the day. Elsewhere, the Dow lost 0.03%, while the tech-heavy Nasdaq added 0.14%.

Heading into today, shares of the semiconductor equipment maker had gained 4.82% over the past month, lagging the Computer and Technology sector's gain of 6.3% and outpacing the S&P 500's gain of 3.23% in that time.

LRCX will be looking to display strength as it nears its next earnings release, which is expected to be January 29, 2020. The company is expected to report EPS of $3.81, down 1.55% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.50 billion, down 0.79% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $15.20 per share and revenue of $9.89 billion, which would represent changes of +4.47% and +2.48%, respectively, from the prior year.

Any recent changes to analyst estimates for LRCX should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.06% lower. LRCX is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that LRCX has a Forward P/E ratio of 20.31 right now. Its industry sports an average Forward P/E of 21.62, so we one might conclude that LRCX is trading at a discount comparatively.

Investors should also note that LRCX has a PEG ratio of 1.5 right now. 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 2.05 based on yesterday's closing prices.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 23, putting it in the top 10% 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.

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


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