Taking on analysts’ expectations and winning: Applied Materials Inc. (AMAT)

Applied Materials Inc. (NASDAQ: AMAT) stock fell -1.33% on Friday to $104.99 against a previous-day closing price of $106.40. With 4.11 million shares changed hands, the volume of the stock remained lighter than its average volume of 7.71 million shares. During the session, the Semiconductor Equipment & Materials company that operates in wider Technology sector, reached to the highest price of $106.54 whereas the lowest price it dropped to was $103.67. The 52-week range on AMAT shows that it touched its highest point at $167.06 and its lowest point at $82.67 during that stretch. It currently has a 1-year price target of $137.31. With its current market cap of 89.16 billion, AMAT has annualized dividend of $1.04 while the current yield stands at 0.99%. Beta for the stock currently stands at 1.52.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of AMAT was up-trending over the past week, with a rise of 6.15%, but this was up by 21.70% over a month. Three-month performance dropped to -7.06% while six-month performance fell -24.02%. The stock lost -26.07% in the past year, while it has lost -33.28% so far this year. A look at the trailing 12-month EPS for AMAT yields 7.49 with Next year EPS estimates of 8.37. For the next quarter, that number is 1.79. This implies an EPS growth rate of 63.40% for this year and 11.78% for next year. EPS is expected to grow by 13.77% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 33.00%.

Float and Shares Shorts:

At present, 878.00 million AMAT shares are outstanding with a float of 868.02 million shares on hand for trading. On Jul 14, 2022, short shares totaled 11.29 million, which was 1.30% higher than short shares on Jun 14, 2022. In addition to Mr. Gary E. Dickerson as the firm’s Pres, CEO & Exec. Director, Mr. Robert J. Halliday serves as its Sr. VP & CFO.

Institutional Ownership:

Through their ownership of 80.25% of AMAT’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 47.44% of AMAT, in contrast to 33.69% held by mutual funds. Shares owned by individuals account for 2.09%. As the largest shareholder in AMAT with 7.97% of the stake, The Vanguard Group, Inc. holds 69,290,016 shares worth 69,290,016. A second-largest stockholder of AMAT, BlackRock Fund Advisors, holds 46,278,666 shares, controlling over 5.32% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in AMAT, holding 40,177,420 shares or 4.62% stake. With a 2.99% stake in AMAT, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 26,046,472 shares are owned by the mutual fund manager. The Vanguard 500 Index Fund, which owns about 2.25% of AMAT stock, is the second-largest Mutual Fund holder. It holds 19,553,340 shares valued at 1.78 billion. American Funds Growth Fund of Ame holds 1.46% of the stake in AMAT, owning 12,681,849 shares worth 1.15 billion.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Apr 30, 2022, AMAT reported revenue of $6.25B and operating income of $1.89B. Over the past year, revenue came in at $24.84B while operating income stood at $7.90B. It generated $1.54B net income for the quarter, which came to $6.76B over the last twelve months. The EBITDA in the recently reported quarter was $2.03B and diluted EPS was $1.74. EBITDA for the full year was $8.41B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for AMAT since 30 analysts follow the stock currently. There are 19 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 8 believe that the stock is worth HOLDING, 3 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With AMAT analysts setting a high price target of $197.00 and a low target of $95.00, the average target price over the next 12 months is $133.04. Based on these targets, AMAT could surge 87.64% to reach the target high and fall by -9.52% to reach the target low. Reaching the average price target will result in a growth of 26.72% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. AMAT will report FY 2022 earnings on 11/17/2022. Analysts have provided yearly estimates in a range of $7.87 being high and $7.29 being low. For AMAT, this leads to a yearly average estimate of $7.50. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Applied Materials Inc. surprised analysts by -$0.05 when it reported $1.85 EPS against a consensus estimate of $1.90. The surprise factor in the prior quarter was $0.03. Based on analyst estimates, the high estimate for the next quarter is $1.87 and the low estimate is $1.75. The average estimate for the next quarter is thus $1.78.

Dividends & Yield:

In terms of dividends, AMAT has a current ratio of $1.04, which is $1.04 over the trailing 12-months, while a dividend of $0.76 is likely to be paid on average over the next five years. Dividend yield is another indicator that appeals to many investors, and AMAT currently yields $0.93. In the past year, AMAT’s dividend yield has been $0.93, but when looking at the stock over the past five years, its yield has been $1.18. Accordingly, AMAT has a current buyback yield of $7.03. This was $7.03 for the TTM, and it was $5.16 for the past five years.

Summary of Insider Activity:

Insiders traded AMAT stock several times over the past three months with 0 Buys and 4 Sells. In these transactions, 0 shares were bought while 43,752 shares were sold. The number of buy transactions has increased to 31 while that of sell transactions has risen to 24 over the past year. The total number of shares bought during that period was 530,220 while 884,579 shares were sold.

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