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Lam Research (LRCX) Gains But Lags Market: What You Should Know

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Lam Research (LRCX - Free Report) closed at $195.01 in the latest trading session, marking a +0.45% move from the prior day. This change lagged the S&P 500's 0.47% gain on the day. Elsewhere, the Dow gained 0.95%, while the tech-heavy Nasdaq added 2.3%.

Coming into today, shares of the semiconductor equipment maker had lost 41.85% in the past month. In that same time, the Computer and Technology sector lost 28.18%, while the S&P 500 lost 28.7%.

Investors will be hoping for strength from LRCX as it approaches its next earnings release. On that day, LRCX is projected to report earnings of $4.57 per share, which would represent year-over-year growth of 23.51%. Meanwhile, our latest consensus estimate is calling for revenue of $2.80 billion, up 14.96% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $16.82 per share and revenue of $10.43 billion, which would represent changes of +15.6% and +8%, respectively, from the prior year.

Any recent changes to analyst estimates for LRCX should also be noted by investors. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. LRCX currently has a Zacks Rank of #2 (Buy).

Digging into valuation, LRCX currently has a Forward P/E ratio of 11.54. For comparison, its industry has an average Forward P/E of 11.08, which means LRCX is trading at a premium to the group.

Also, we should mention that LRCX has a PEG ratio of 0.65. 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 0.95 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 13, putting it in the top 6% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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