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

Zacks Equity Research

STMicroelectronics (STM) closed at $15.75 in the latest trading session, marking a -1.75% move from the prior day. This change lagged the S&P 500's daily loss of 0.15%. Elsewhere, the Dow gained 0.21%, while the tech-heavy Nasdaq lost 0.81%.

Coming into today, shares of the chip company had gained 15.49% in the past month. In that same time, the Computer and Technology sector gained 5.57%, while the S&P 500 gained 6.55%.

STM will be looking to display strength as it nears its next earnings release, which is expected to be April 24, 2019. In that report, analysts expect STM to post earnings of $0.21 per share. This would mark a year-over-year decline of 25%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.10 billion, down 5.66% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.08 per share and revenue of $8.75 billion. These totals would mark changes of -24.48% and -9.47%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for STM. These revisions typically reflect the latest short-term business trends, which can change frequently. 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.

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 18.49% lower. STM is currently sporting a Zacks Rank of #4 (Sell).

Looking at its valuation, STM is holding a Forward P/E ratio of 14.84. Its industry sports an average Forward P/E of 15.03, so we one might conclude that STM is trading at a discount comparatively.

Investors should also note that STM has a PEG ratio of 2.97 right now. 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. STM's industry had an average PEG ratio of 1.79 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 247, which puts it in the bottom 4% 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.

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

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