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Why the Market Dipped But Applied Materials (AMAT) Gained Today

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Applied Materials (AMAT - Free Report) closed the latest trading day at $171.09, indicating a +1.73% change from the previous session's end. This change outpaced the S&P 500's 0.32% loss on the day. On the other hand, the Dow registered a loss of 0.71%, and the technology-centric Nasdaq decreased by 0.2%.

The the stock of maker of chipmaking equipment has risen by 12.87% in the past month, leading the Computer and Technology sector's gain of 9.33% and the S&P 500's gain of 4.59%.

Market participants will be closely following the financial results of Applied Materials in its upcoming release. The company plans to announce its earnings on February 15, 2024. It is anticipated that the company will report an EPS of $1.89, marking a 6.9% fall compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $6.47 billion, down 3.95% from the prior-year quarter.

For the full year, the Zacks Consensus Estimates project earnings of $7.56 per share and a revenue of $25.92 billion, demonstrating changes of -6.09% and -2.26%, respectively, from the preceding year.

Investors might also notice recent changes to analyst estimates for Applied Materials. These recent revisions tend to reflect the evolving nature of short-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.63% increase. As of now, Applied Materials holds a Zacks Rank of #3 (Hold).

From a valuation perspective, Applied Materials is currently exchanging hands at a Forward P/E ratio of 22.25. This valuation marks a discount compared to its industry's average Forward P/E of 25.75.

Investors should also note that AMAT has a PEG ratio of 3.35 right now. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. As the market closed yesterday, the Semiconductor Equipment - Wafer Fabrication industry was having an average PEG ratio of 3.18.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 59, positioning it in the top 24% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in 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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