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STMicroelectronics (STM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

STMicroelectronics (STM) closed the most recent trading day at $27.71, moving +1.35% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.84%. Elsewhere, the Dow gained 0.92%, while the tech-heavy Nasdaq added 1.06%.

Heading into today, shares of the chip company had gained 2.78% over the past month, lagging the Computer and Technology sector's gain of 6.54% and the S&P 500's gain of 3.95% in that time.

Investors will be hoping for strength from STM as it approaches its next earnings release, which is expected to be January 23, 2020. On that day, STM is projected to report earnings of $0.37 per share, which would represent a year-over-year decline of 19.57%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.68 billion, up 1.27% from the year-ago period.

Investors should also note any 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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. Within the past 30 days, our consensus EPS projection has moved 1.58% higher. STM is currently a Zacks Rank #2 (Buy).

Looking at its valuation, STM is holding a Forward P/E ratio of 18.95. For comparison, its industry has an average Forward P/E of 20.3, which means STM is trading at a discount to the group.

Investors should also note that STM has a PEG ratio of 3.79 right now. 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. Semiconductor - General stocks are, on average, holding a PEG ratio of 2.56 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 36, which puts it in the top 15% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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