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Applied Materials (AMAT) Exceeds Market Returns: Some Facts to Consider

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In the latest market close, Applied Materials (AMAT - Free Report) reached $168.48, with a +0.95% movement compared to the previous day. This change outpaced the S&P 500's 0.76% gain on the day. On the other hand, the Dow registered a gain of 0.59%, and the technology-centric Nasdaq increased by 1.12%.

Heading into today, shares of the maker of chipmaking equipment had gained 2.98% over the past month, lagging the Computer and Technology sector's gain of 4.99% and outpacing the S&P 500's gain of 2.5% in that time.

The investment community will be closely monitoring the performance of Applied Materials in its forthcoming earnings report. The company's earnings per share (EPS) are projected to be $1.89, reflecting a 6.9% decrease from the same quarter last year. Meanwhile, our latest consensus estimate is calling for revenue of $6.47 billion, down 3.95% from the prior-year quarter.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $7.56 per share and a revenue of $25.92 billion, representing changes of -6.09% and -2.26%, respectively, from the prior year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Applied Materials. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. 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.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.63% higher. Applied Materials is currently a Zacks Rank #4 (Sell).

From a valuation perspective, Applied Materials is currently exchanging hands at a Forward P/E ratio of 22.08. Its industry sports an average Forward P/E of 25.84, so one might conclude that Applied Materials is trading at a discount comparatively.

It's also important to note that AMAT currently trades at a PEG ratio of 3.32. 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. AMAT's industry had an average PEG ratio of 3.81 as of yesterday's close.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 192, finds itself in the bottom 24% echelons of all 250+ industries.

The Zacks Industry Rank is ordered 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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