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Ambarella (AMBA) Stock Sinks As Market Gains: What You Should Know

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Ambarella (AMBA - Free Report) closed the most recent trading day at $180.06, moving -0.7% from the previous trading session. This change lagged the S&P 500's 0.17% gain on the day. Meanwhile, the Dow gained 0.55%, and the Nasdaq, a tech-heavy index, lost 0.44%.

Prior to today's trading, shares of the video-compression chipmaker had gained 0.82% over the past month. This has lagged the Computer and Technology sector's gain of 4.39% and the S&P 500's gain of 3.19% in that time.

Ambarella will be looking to display strength as it nears its next earnings release, which is expected to be November 30, 2021. The company is expected to report EPS of $0.49, up 444.44% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $90.48 million, up 61.31% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.47 per share and revenue of $327.73 million, which would represent changes of +345.45% and +46.97%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Ambarella. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Within the past 30 days, our consensus EPS projection remained stagnant. Ambarella is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, Ambarella is holding a Forward P/E ratio of 123.45. For comparison, its industry has an average Forward P/E of 25.38, which means Ambarella is trading at a premium to the group.

We can also see that AMBA currently has a PEG ratio of 8.23. 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. The Electronics - Semiconductors was holding an average PEG ratio of 1.54 at yesterday's closing price.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 47, which puts it in the top 19% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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