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Nvidia (NVDA) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Nvidia (NVDA) closed at $250.76 in the latest trading session, marking a +1.47% move from the prior day. This move outpaced the S&P 500's daily gain of 1.13%. At the same time, the Dow added 1.68%, and the tech-heavy Nasdaq gained 0.43%.

Coming into today, shares of the maker of graphics chips for gaming and artificial intelligence had gained 3% in the past month. In that same time, the Computer and Technology sector gained 5.2%, while the S&P 500 gained 2.1%.

Investors will be hoping for strength from NVDA as it approaches its next earnings release, which is expected to be February 13, 2020. On that day, NVDA is projected to report earnings of $1.66 per share, which would represent year-over-year growth of 107.5%. Our most recent consensus estimate is calling for quarterly revenue of $2.96 billion, up 34.16% from the year-ago period.

Any recent changes to analyst estimates for NVDA should also be noted by investors. 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. 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 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. The Zacks Consensus EPS estimate remained stagnant within the past month. NVDA currently has a Zacks Rank of #3 (Hold).

Digging into valuation, NVDA currently has a Forward P/E ratio of 34.08. This valuation marks a premium compared to its industry's average Forward P/E of 23.54.

We can also see that NVDA currently has a PEG ratio of 3. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor - General industry currently had an average PEG ratio of 2.47 as of yesterday's close.

The Semiconductor - General industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 87, putting it in the top 35% 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.

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


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