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

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Applied Materials (AMAT - Free Report) closed the most recent trading day at $59.06, moving +1.16% from the previous trading session. This move lagged the S&P 500's daily gain of 1.47%. Elsewhere, the Dow gained 2.32%, while the tech-heavy Nasdaq added 1.2%.

Heading into today, shares of the maker of chipmaking equipment had gained 6.79% over the past month, outpacing the Computer and Technology sector's gain of 4.26% and the S&P 500's gain of 0.74% in that time.

Investors will be hoping for strength from AMAT as it approaches its next earnings release. The company is expected to report EPS of $0.95, up 28.38% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $4.20 billion, up 17.81% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.81 per share and revenue of $16.67 billion, which would represent changes of +25.33% and +14.1%, respectively, from the prior year.

Any recent changes to analyst estimates for AMAT should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

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 a Zacks Rank #3 (Hold).

Digging into valuation, AMAT currently has a Forward P/E ratio of 15.31. Its industry sports an average Forward P/E of 20.16, so we one might conclude that AMAT is trading at a discount comparatively.

Also, we should mention that AMAT has a PEG ratio of 1.13. 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 Equipment - Wafer Fabrication industry currently had an average PEG ratio of 1.53 as of yesterday's close.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 96, which puts it in the top 38% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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