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

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Applied Materials (AMAT) closed the most recent trading day at $107.18, moving +1.35% from the previous trading session. This change outpaced the S&P 500's 0.25% gain on the day. At the same time, the Dow lost 0.26%, and the tech-heavy Nasdaq lost 0.54%.

Prior to today's trading, shares of the maker of chipmaking equipment had lost 9.02% over the past month. This has was narrower than the Computer and Technology sector's loss of 13.61% and the S&P 500's loss of 11.03% in that time.

Investors will be hoping for strength from Applied Materials as it approaches its next earnings release, which is expected to be May 19, 2022. On that day, Applied Materials is projected to report earnings of $1.89 per share, which would represent year-over-year growth of 15.95%. Meanwhile, our latest consensus estimate is calling for revenue of $6.35 billion, up 13.78% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.02 per share and revenue of $26.46 billion. These totals would mark changes of +17.25% and +14.73%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Applied Materials. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.49% lower. Applied Materials is currently sporting a Zacks Rank of #4 (Sell).

Digging into valuation, Applied Materials currently has a Forward P/E ratio of 13.19. This valuation marks a discount compared to its industry's average Forward P/E of 14.42.

Also, we should mention that AMAT has a PEG ratio of 1.31. 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 1.31 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 197, which puts it in the bottom 22% 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.

To follow AMAT in the coming trading sessions, be sure to utilize Zacks.com.


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