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STMicroelectronics (STM) Dips More Than Broader Markets: What You Should Know

·3 min read

In the latest trading session, STMicroelectronics (STM) closed at $42.19, marking a -1.91% move from the previous day. This move lagged the S&P 500's daily loss of 1.23%. Meanwhile, the Dow lost 1.29%, and the Nasdaq, a tech-heavy index, lost 0.14%.

Heading into today, shares of the chip company had gained 1.58% over the past month, lagging the Computer and Technology sector's gain of 4.45% and the S&P 500's gain of 5.04% in that time.

Wall Street will be looking for positivity from STMicroelectronics as it approaches its next earnings report date. On that day, STMicroelectronics is projected to report earnings of $0.71 per share, which would represent year-over-year growth of 82.05%. Meanwhile, our latest consensus estimate is calling for revenue of $3.52 billion, up 16.81% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.23 per share and revenue of $14.82 billion, which would represent changes of +49.54% and +16.11%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for STMicroelectronics. Recent revisions tend to reflect the latest near-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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. STMicroelectronics is holding a Zacks Rank of #1 (Strong Buy) right now.

In terms of valuation, STMicroelectronics is currently trading at a Forward P/E ratio of 13.3. Its industry sports an average Forward P/E of 13.66, so we one might conclude that STMicroelectronics is trading at a discount comparatively.

Meanwhile, STM's PEG ratio is currently 2.66. 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. Semiconductor - General stocks are, on average, holding a PEG ratio of 2.41 based on yesterday's closing prices.

The Semiconductor - General industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 6, putting it in the top 3% 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 STM in the coming trading sessions, be sure to utilize Zacks.com.


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