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Shares of Lam Research (LRCX - Free Report) surged over 3% on Wednesday as part of a run that has seen the company’s stock price climb nearly 19% in the last 12 weeks alone. The wafer fabrication equipment company has consistently impressed shareholders over the last year, so let’s take a look at why Lam looks poised to continue its current run of success.
Recent News
Lam manufactures products that are essential to the semiconductor industry and help fuel the information age. The company recently highlighted some of the biggest factors that are set to contribute to its growth at its 2018 investors meeting.
Lam noted that 67 zettabytes—equal to 67 trillion gigabytes—of data will be generated by 2020. “We are literally just scratching the surface of what is possible in the world of data,” Lam CEO Martin Anstice said at the conference. “We believe that the fundamental future of Lam Research is inextricably linked to the rising importance of a data economy.”
Lam also recently unveiled a plan to return at least 50% of free cash flow to stockholders over the next five years. Starting in the June quarter, Lam will also increase its quarterly dividend by 120% to $1.10 per share.
On top of those initiatives, Lam announced an additional $2 billion share repurchase program, which brings its total authorization to $4 billion since Nov. 2017. The Fremont, California-based company hopes to execute this plan over the next 12 to 18 months.
Growth Fundamentals
Lam is expected to see its current-quarter earnings skyrocket by nearly 56% to $4.36 per share, based on our current Zacks Consensus Estimates. The tech firm is also expected to see its quarterly revenues surge over 32% to reach $2.85 billion.
The company’s full-year earnings are expected to skyrocket by nearly 68% to reach $16.74 per share, while Lam’s full-year sales are projected to jump by 35% to hit $10.85 billion.
Looking even further down the road, Lam is expected to see its EPS figure expand at an annualized rate of 14.9% over the next three to five years.
Investors will also be happy to note that the company has experienced a slew of estimate revisions recently, with 100% agreement to the upside for both its current quarter and full year.
Solid Value
Shares of Lam have skyrocketed over 76% in the last year and surged 13% in the last month, yet its stock price currently rests below its 52-week high. Despite this climb, Lam is also currently trading at 13.1x forward earnings, which falls slightly below the “Semiconductor Equipment - Wafer Fabrication” industry’s average P/E of 13.5.
Lam has also consistently traded at a discount to its larger peer group, which includes Applied Material (AMAT - Free Report) , during this same time frame.
Bottom Line
Lam is currently a Zacks Rank #1 (Strong Buy) and sports a “B” grade for Value in our Style Scores system. The company is also projected to grow both its top and bottom lines at sizable rates this year. Meanwhile, the stock looks undervalued at its current level, leaving plenty of room for profits.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Why Lam Research (LRCX) Is a Strong Buy Stock
Shares of Lam Research (LRCX - Free Report) surged over 3% on Wednesday as part of a run that has seen the company’s stock price climb nearly 19% in the last 12 weeks alone. The wafer fabrication equipment company has consistently impressed shareholders over the last year, so let’s take a look at why Lam looks poised to continue its current run of success.
Recent News
Lam manufactures products that are essential to the semiconductor industry and help fuel the information age. The company recently highlighted some of the biggest factors that are set to contribute to its growth at its 2018 investors meeting.
Lam noted that 67 zettabytes—equal to 67 trillion gigabytes—of data will be generated by 2020. “We are literally just scratching the surface of what is possible in the world of data,” Lam CEO Martin Anstice said at the conference. “We believe that the fundamental future of Lam Research is inextricably linked to the rising importance of a data economy.”
Lam also recently unveiled a plan to return at least 50% of free cash flow to stockholders over the next five years. Starting in the June quarter, Lam will also increase its quarterly dividend by 120% to $1.10 per share.
On top of those initiatives, Lam announced an additional $2 billion share repurchase program, which brings its total authorization to $4 billion since Nov. 2017. The Fremont, California-based company hopes to execute this plan over the next 12 to 18 months.
Growth Fundamentals
Lam is expected to see its current-quarter earnings skyrocket by nearly 56% to $4.36 per share, based on our current Zacks Consensus Estimates. The tech firm is also expected to see its quarterly revenues surge over 32% to reach $2.85 billion.
The company’s full-year earnings are expected to skyrocket by nearly 68% to reach $16.74 per share, while Lam’s full-year sales are projected to jump by 35% to hit $10.85 billion.
Looking even further down the road, Lam is expected to see its EPS figure expand at an annualized rate of 14.9% over the next three to five years.
Investors will also be happy to note that the company has experienced a slew of estimate revisions recently, with 100% agreement to the upside for both its current quarter and full year.
Solid Value
Shares of Lam have skyrocketed over 76% in the last year and surged 13% in the last month, yet its stock price currently rests below its 52-week high. Despite this climb, Lam is also currently trading at 13.1x forward earnings, which falls slightly below the “Semiconductor Equipment - Wafer Fabrication” industry’s average P/E of 13.5.
Lam has also consistently traded at a discount to its larger peer group, which includes Applied Material (AMAT - Free Report) , during this same time frame.
Bottom Line
Lam is currently a Zacks Rank #1 (Strong Buy) and sports a “B” grade for Value in our Style Scores system. The company is also projected to grow both its top and bottom lines at sizable rates this year. Meanwhile, the stock looks undervalued at its current level, leaving plenty of room for profits.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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