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Nvidia (NVDA) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 min read

Nvidia (NVDA) closed at $503.23 in the latest trading session, marking a +0.37% move from the prior day. The stock lagged the S&P 500's daily gain of 1.23%. At the same time, the Dow added 1.6%, and the tech-heavy Nasdaq gained 0.42%.

Prior to today's trading, shares of the maker of graphics chips for gaming and artificial intelligence had lost 7.94% over the past month. This has lagged the Computer and Technology sector's loss of 1.34% and the S&P 500's loss of 2.51% in that time.

Investors will be hoping for strength from NVDA as it approaches its next earnings release, which is expected to be November 18, 2020. The company is expected to report EPS of $2.57, up 44.38% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.42 billion, up 46.59% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.13 per share and revenue of $15.83 billion. These totals would mark changes of +57.69% and +45.02%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for NVDA. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.26% higher. NVDA is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note NVDA's current valuation metrics, including its Forward P/E ratio of 54.94. This valuation marks a premium compared to its industry's average Forward P/E of 22.57.

Meanwhile, NVDA's PEG ratio is currently 2.74. 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 industry currently had an average PEG ratio of 2.79 as of yesterday's close.

The Semiconductor - General industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 184, which puts it in the bottom 28% 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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Zacks Investment Research