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

In the latest trading session, Applied Materials (AMAT) closed at $38.34, marking a -0.78% move from the previous day. This move lagged the S&P 500's daily gain of 0.36%. At the same time, the Dow added 0.73%, and the tech-heavy Nasdaq lost 0.11%.

Prior to today's trading, shares of the maker of chipmaking equipment had lost 10.41% over the past month. This has lagged the Computer and Technology sector's loss of 0.17% and the S&P 500's gain of 0.73% in that time.

Investors will be hoping for strength from AMAT as it approaches its next earnings release, which is expected to be November 15, 2018. The company is expected to report EPS of $0.96, up 3.23% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $4 billion, up 0.85% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.45 per share and revenue of $17.24 billion, which would represent changes of +36.92% and +18.61%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for AMAT. Recent revisions tend to reflect the latest near-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.

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 remained stagnant. AMAT is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, AMAT is currently trading at a Forward P/E ratio of 8.69. This valuation marks a discount compared to its industry's average Forward P/E of 10.93.

Investors should also note that AMAT has a PEG ratio of 0.79 right now. 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 was holding an average PEG ratio of 1.09 at yesterday's closing price.

The Semiconductor Equipment - Wafer Fabrication industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 35, which puts it in the top 14% 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.

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

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