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

Zacks Equity Research

Nvidia (NVDA) closed the most recent trading day at $262.86, moving -1.53% from the previous trading session. This move lagged the S&P 500's daily gain of 1.45%. Meanwhile, the Dow gained 1.22%, and the Nasdaq, a tech-heavy index, added 0.78%.

Coming into today, shares of the maker of graphics chips for gaming and artificial intelligence had gained 8.31% in the past month. In that same time, the Computer and Technology sector lost 5.61%, while the S&P 500 lost 7.42%.

Investors will be hoping for strength from NVDA as it approaches its next earnings release. In that report, analysts expect NVDA to post earnings of $1.57 per share. This would mark year-over-year growth of 78.41%. Meanwhile, our latest consensus estimate is calling for revenue of $2.86 billion, up 28.79% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.07 per share and revenue of $12.33 billion. These totals would mark changes of +22.11% and +12.94%, respectively, from last year.

Investors should also note any 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. Within the past 30 days, our consensus EPS projection has moved 14.31% lower. NVDA is currently a Zacks Rank #3 (Hold).

In terms of valuation, NVDA is currently trading at a Forward P/E ratio of 37.78. Its industry sports an average Forward P/E of 18.55, so we one might conclude that NVDA is trading at a premium comparatively.

Meanwhile, NVDA's PEG ratio is currently 2.56. 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 2.56 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 69, putting it in the top 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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