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STMicroelectronics (STM) Gains As Market Dips: What You Should Know

Zacks Equity Research

STMicroelectronics (STM) closed at $21.37 in the latest trading session, marking a +0.23% move from the prior day. The stock outpaced the S&P 500's daily loss of 1.6%. At the same time, the Dow lost 1.84%, and the tech-heavy Nasdaq lost 0.95%.

Prior to today's trading, shares of the chip company had lost 23.39% over the past month. This has lagged the Computer and Technology sector's loss of 9.68% and the S&P 500's loss of 10.82% in that time.

STM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.38, up 90% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.36 billion, up 13.68% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.44 per share and revenue of $10.74 billion. These totals would mark changes of +25.22% and +12.34%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for STM. 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.

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 has moved 5.89% lower within the past month. STM is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, STM is currently trading at a Forward P/E ratio of 14.83. For comparison, its industry has an average Forward P/E of 21.42, which means STM is trading at a discount to the group.

Also, we should mention that STM has a PEG ratio of 2.97. 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. Semiconductor - General stocks are, on average, holding a PEG ratio of 2.36 based on yesterday's closing prices.

The Semiconductor - General industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 95, which puts it in the top 38% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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