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Applied Materials (AMAT) Outpaces Stock Market Gains: What You Should Know

Zacks

Applied Materials (AMAT) closed at $38.89 in the latest trading session, marking a +1.32% move from the prior day. This move outpaced the S&P 500′s daily gain of 0.53%. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq gained 0.75%.

Prior to today’s trading, shares of the maker of chipmaking equipment had lost 19.2% over the past month. This has lagged the Computer and Technology sector’s gain of 0.86% and the S&P 500′s gain of 2.16% in that time.

AMAT will be looking to display strength as it nears its next earnings release, which is expected to be November 15, 2018. On that day, AMAT is projected to report earnings of $0.96 per share, which would represent year-over-year growth of 3.23%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4 billion, up 0.85% from the year-ago period.

AMAT’s full-year Zacks Consensus Estimates are calling for earnings of $4.45 per share and revenue of $17.24 billion. These results would represent year-over-year changes of +36.92% and +18.61%, respectively.


Investors might also notice recent changes to analyst estimates for AMAT. 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. 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 2.65% lower. AMAT is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note AMAT’s current valuation metrics, including its Forward P/E ratio of 8.63. For comparison, its industry has an average Forward P/E of 11.04, which means AMAT is trading at a discount to the group.

Meanwhile, AMAT’s PEG ratio is currently 0.67. 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. The Semiconductor Equipment – Wafer Fabrication industry currently had an average PEG ratio of 1.13 as of yesterday’s close.

The Semiconductor Equipment – Wafer Fabrication industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 37, 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.

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


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