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Applied Materials (AMAT) Registers a Bigger Fall Than the Market: Important Facts to Note

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In the latest trading session, Applied Materials (AMAT - Free Report) closed at $147.68, marking a -1.99% move from the previous day. The stock's change was less than the S&P 500's daily loss of 0.33%. Elsewhere, the Dow lost 0.37%, while the tech-heavy Nasdaq lost 0.53%.

The the stock of maker of chipmaking equipment has fallen by 10.58% in the past month, lagging the Computer and Technology sector's loss of 7.14% and the S&P 500's loss of 4.03%.

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 $2.30, reflecting a 10.05% increase from the same quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $7.11 billion, reflecting a 6.97% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $9.35 per share and a revenue of $28.77 billion, demonstrating changes of +8.09% and +5.86%, respectively, from the preceding year.

Investors should also pay attention to any latest changes in analyst estimates for Applied Materials. These revisions help to show the ever-changing nature of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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, 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 moved 0.34% lower. Applied Materials is currently a Zacks Rank #3 (Hold).

Looking at valuation, Applied Materials is presently trading at a Forward P/E ratio of 16.12. For comparison, its industry has an average Forward P/E of 24.27, which means Applied Materials is trading at a discount to the group.

It's also important to note that AMAT currently trades at a PEG ratio of 1.59. 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 industry had an average PEG ratio of 1.53 as trading concluded yesterday.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 61, positioning it in the top 25% of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.


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