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Applied Materials (AMAT) Gains But Lags Market: What You Should Know

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In the latest trading session, Applied Materials (AMAT - Free Report) closed at $61.97, marking a +0.63% move from the previous day. This change lagged the S&P 500's 0.67% gain on the day. Elsewhere, the Dow gained 0.74%, while the tech-heavy Nasdaq added 0.81%.

Prior to today's trading, shares of the maker of chipmaking equipment had gained 4.3% over the past month. This has lagged the Computer and Technology sector's gain of 6.02% and outpaced the S&P 500's gain of 3.55% in that time.

Wall Street will be looking for positivity from AMAT as it approaches its next earnings report date. On that day, AMAT is projected to report earnings of $0.92 per share, which would represent year-over-year growth of 13.58%. Meanwhile, our latest consensus estimate is calling for revenue of $4.10 billion, up 9.26% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.77 per share and revenue of $16.65 billion. These totals would mark changes of +24.01% and +13.98%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for AMAT. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. AMAT is currently sporting a Zacks Rank of #1 (Strong Buy).

Investors should also note AMAT's current valuation metrics, including its Forward P/E ratio of 16.32. This valuation marks a discount compared to its industry's average Forward P/E of 20.53.

Also, we should mention that AMAT has a PEG ratio of 1.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor Equipment - Wafer Fabrication was holding an average PEG ratio of 1.99 at yesterday's closing price.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 4, putting it in the top 2% 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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