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Nvidia (NVDA) Outpaces Stock Market Gains: What You Should Know

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In the latest trading session, Nvidia (NVDA - Free Report) closed at $142.58, marking a +1.97% move from the previous day. This move outpaced the S&P 500's daily gain of 0.48%. Elsewhere, the Dow gained 0.53%, while the tech-heavy Nasdaq added 0.8%.

Prior to today's trading, shares of the maker of graphics chips for gaming and artificial intelligence had lost 5.64% over the past month. This has lagged the Computer and Technology sector's loss of 1.5% and the S&P 500's loss of 2.09% in that time.

Investors will be hoping for strength from NVDA as it approaches its next earnings release, which is expected to be February 14, 2019. On that day, NVDA is projected to report earnings of $1.41 per share, which would represent a year-over-year decline of 18.02%. Meanwhile, our latest consensus estimate is calling for revenue of $2.70 billion, down 7.18% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.24 per share and revenue of $12.21 billion, which would represent changes of +47.15% and +25.73%, respectively, from the prior year.

Any recent changes to analyst estimates for NVDA should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. NVDA is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, NVDA is currently trading at a Forward P/E ratio of 19.32. Its industry sports an average Forward P/E of 12.26, so we one might conclude that NVDA is trading at a premium comparatively.

It is also worth noting that NVDA currently has a PEG ratio of 1.81. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Semiconductor - General was holding an average PEG ratio of 1.81 at yesterday's closing price.

The Semiconductor - General industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 178, putting it in the bottom 31% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow NVDA in the coming trading sessions, be sure to utilize Zacks.com.


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