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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 $446.60, moving -1.5% from the previous trading session. This change lagged the S&P 500's daily gain of 0.27%. At the same time, the Dow added 1.31%, and the tech-heavy Nasdaq lost 0.39%.

Prior to today's trading, shares of the maker of graphics chips for gaming and artificial intelligence had gained 6.57% over the past month. This has lagged the Computer and Technology sector's gain of 6.66% and the S&P 500's gain of 6.66% in that time.

Investors will be hoping for strength from NVDA as it approaches its next earnings release, which is expected to be August 19, 2020. On that day, NVDA is projected to report earnings of $1.93 per share, which would represent year-over-year growth of 55.65%. Our most recent consensus estimate is calling for quarterly revenue of $3.65 billion, up 41.71% from the year-ago period.

NVDA's full-year Zacks Consensus Estimates are calling for earnings of $7.90 per share and revenue of $14.47 billion. These results would represent year-over-year changes of +36.44% and +32.57%, respectively.

Investors might also notice recent changes to analyst estimates for NVDA. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Within the past 30 days, our consensus EPS projection has moved 0.11% higher. NVDA is currently a Zacks Rank #3 (Hold).

Looking at its valuation, NVDA is holding a Forward P/E ratio of 56.69. For comparison, its industry has an average Forward P/E of 30.16, which means NVDA is trading at a premium to the group.

We can also see that NVDA currently has a PEG ratio of 3.36. 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. The Semiconductor - General industry currently had an average PEG ratio of 3.1 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 71, which puts it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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


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