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Nvidia (NVDA) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 min read

Nvidia (NVDA) closed the most recent trading day at $530.88, moving -0.52% from the previous trading session. This move lagged the S&P 500's daily loss of 0.35%. Meanwhile, the Dow lost 0.41%, and the Nasdaq, a tech-heavy index, lost 0.07%.

Heading into today, shares of the maker of graphics chips for gaming and artificial intelligence had lost 0.74% over the past month, lagging the Computer and Technology sector's gain of 6.18% and the S&P 500's gain of 3.21% in that time.

Investors will be hoping for strength from NVDA as it approaches its next earnings release. The company is expected to report EPS of $2.80, up 48.15% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.82 billion, up 55.26% from the year-ago period.

NVDA's full-year Zacks Consensus Estimates are calling for earnings of $9.71 per share and revenue of $16.49 billion. These results would represent year-over-year changes of +67.7% and +51.04%, respectively.

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

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.

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. The Zacks Consensus EPS estimate has moved 10.35% higher within the past month. NVDA is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note NVDA's current valuation metrics, including its Forward P/E ratio of 54.94. For comparison, its industry has an average Forward P/E of 28.05, which means NVDA is trading at a premium to the group.

Also, we should mention that NVDA has a PEG ratio of 3.01. 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 - General was holding an average PEG ratio of 3.1 at yesterday's closing price.

The Semiconductor - General industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 204, which puts it in the bottom 20% 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.

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


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