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Applied Materials (AMAT) Dips More Than Broader Markets: What You Should Know

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Applied Materials (AMAT - Free Report) closed at $38.58 in the latest trading session, marking a -1.34% move from the prior day. The stock lagged the S&P 500's daily loss of 0.13%. Meanwhile, the Dow lost 0.26%, and the Nasdaq, a tech-heavy index, added 0.18%.

Coming into today, shares of the maker of chipmaking equipment had lost 10.63% in the past month. In that same time, the Computer and Technology sector gained 0.35%, while the S&P 500 gained 1.71%.

AMAT will be looking to display strength as it nears its next earnings release, which is expected to be November 15, 2018. The company is expected to report EPS of $0.96, up 3.23% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4 billion, up 0.85% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.45 per share and revenue of $17.24 billion. These totals would mark changes of +36.92% and +18.61%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for AMAT. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. AMAT is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, AMAT currently has a Forward P/E ratio of 8.79. For comparison, its industry has an average Forward P/E of 11.25, which means AMAT is trading at a discount to the group.

It is also worth noting that AMAT currently has a PEG ratio of 0.8. 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 Equipment - Wafer Fabrication industry currently had an average PEG ratio of 1.14 as of yesterday's close.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 21, putting it in the top 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within 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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