Applied Materials (AMAT) Outpaces Stock Market Gains: What You Should Know

In the latest trading session, Applied Materials (AMAT) closed at $34.17, marking a +1.58% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.18%. Meanwhile, the Dow gained 0.14%, and the Nasdaq, a tech-heavy index, added 0.74%.

Coming into today, shares of the maker of chipmaking equipment had lost 3.72% in the past month. In that same time, the Computer and Technology sector lost 7.12%, while the S&P 500 lost 6.19%.

Investors will be hoping for strength from AMAT as it approaches its next earnings release, which is expected to be February 13, 2019. On that day, AMAT is projected to report earnings of $0.79 per share, which would represent a year-over-year decline of 25.47%. Meanwhile, our latest consensus estimate is calling for revenue of $3.72 billion, down 11.57% from the prior-year quarter.

AMAT's full-year Zacks Consensus Estimates are calling for earnings of $3.54 per share and revenue of $15.45 billion. These results would represent year-over-year changes of -20.45% and -10.47%, respectively.

Investors might also notice recent changes to analyst estimates for AMAT. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Within the past 30 days, our consensus EPS projection has moved 16.03% lower. AMAT currently has a Zacks Rank of #4 (Sell).

Investors should also note AMAT's current valuation metrics, including its Forward P/E ratio of 9.51. For comparison, its industry has an average Forward P/E of 9.61, which means AMAT is trading at a discount to the group.

It is also worth noting that AMAT currently has a PEG ratio of 1.11. 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 1.11 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 236, putting it in the bottom 8% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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