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STMicroelectronics (STM) Dips More Than Broader Market: What You Should Know

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The latest trading session saw STMicroelectronics (STM - Free Report) ending at $41.88, denoting a -1.55% adjustment from its last day's close. This change lagged the S&P 500's daily loss of 1.23%. On the other hand, the Dow registered a loss of 1.36%, and the technology-centric Nasdaq decreased by 1.4%.

Shares of the chip company have depreciated by 9.22% over the course of the past month, underperforming the Computer and Technology sector's gain of 2.32% and the S&P 500's gain of 1.61%.

Investors will be eagerly watching for the performance of STMicroelectronics in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $0.59, marking a 46.36% fall compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $3.6 billion, down 15.16% from the prior-year quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $3.06 per share and revenue of $16.23 billion. These totals would mark changes of -31.39% and -6.11%, respectively, from last year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for STMicroelectronics. These revisions help to show the ever-changing nature of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. STMicroelectronics is holding a Zacks Rank of #4 (Sell) right now.

With respect to valuation, STMicroelectronics is currently being traded at a Forward P/E ratio of 13.93. This valuation marks a discount compared to its industry's average Forward P/E of 27.08.

We can also see that STM currently has a PEG ratio of 2.79. 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 Semiconductor - General industry currently had an average PEG ratio of 2.42 as of yesterday's close.

The Semiconductor - General industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 65, this industry ranks in the top 26% of all industries, numbering over 250.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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