A History of Outperforming Analyst Forecasts and Beating the Odds: Lam Research Corporation (LRCX)

Lam Research Corporation (NASDAQ: LRCX) stock fell -2.97% on Friday to $386.83 against a previous-day closing price of $398.65. With 1.51 million shares changed hands, the volume of the stock remained heavier than its average volume of 1.4 million shares. During the session, the Semiconductor Equipment & Materials company that operates in wider Technology sector, reached to the highest price of $396.68 whereas the lowest price it dropped to was $385.82. The 52-week range on LRCX shows that it touched its highest point at $731.85 and its lowest point at $375.87 during that stretch. It currently has a 1-year price target of $559.36. With its current market cap of 53.54 billion, LRCX has annualized dividend of $6.90 while the current yield stands at 1.78%. Beta for the stock currently stands at 1.37.

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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 LRCX was down-trending over the past week, with a drop of -6.44%, but this was down by -16.63% over a month. Three-month performance dropped to -8.78% while six-month performance fell -27.15%. The stock lost -35.65% in the past year, while it has lost -46.21% so far this year. A look at the trailing 12-month EPS for LRCX yields 32.75 with Next year EPS estimates of 35.70. For the next quarter, that number is 9.55. This implies an EPS growth rate of 21.80% for this year and -5.63% for next year. EPS is expected to grow by 7.66% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 28.80%.

Float and Shares Shorts:

At present, 137.99 million LRCX shares are outstanding with a float of 136.68 million shares on hand for trading. On Jul 14, 2022, short shares totaled 1.7 million, which was 1.22% higher than short shares on Jun 14, 2022. In addition to Mr. Timothy M. Archer as the firm’s Pres, CEO & Director, Mr. Douglas R. Bettinger serves as its Exec. VP, CFO & Chief Accounting Officer.

Institutional Ownership:

Through their ownership of 84.75% of LRCX’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 51.48% of LRCX, in contrast to 32.26% held by mutual funds. Shares owned by individuals account for 1.00%. As the largest shareholder in LRCX with 8.08% of the stake, The Vanguard Group, Inc. holds 11,071,440 shares worth 11,071,440. A second-largest stockholder of LRCX, BlackRock Fund Advisors, holds 7,110,666 shares, controlling over 5.19% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in LRCX, holding 5,637,614 shares or 4.12% stake. With a 3.00% stake in LRCX, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 4,107,603 shares are owned by the mutual fund manager. The Vanguard 500 Index Fund, which owns about 2.26% of LRCX stock, is the second-largest Mutual Fund holder. It holds 3,095,801 shares valued at 1.36 billion. Invesco QQQ Trust holds 1.46% of the stake in LRCX, owning 1,997,610 shares worth 874.77 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for LRCX since 26 analysts follow the stock currently. There are 13 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 10 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 LRCX analysts setting a high price target of $700.00 and a low target of $450.00, the average target price over the next 12 months is $555.29. Based on these targets, LRCX could surge 80.96% to reach the target high and rise by 16.33% to reach the target low. Reaching the average price target will result in a growth of 43.55% 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. LRCX will report FY 2023 earnings on 07/26/2023. Analysts have provided yearly estimates in a range of $41.81 being high and $32.44 being low. For LRCX, this leads to a yearly average estimate of $37.49. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Lam Research Corporation surprised analysts by $1.51 when it reported $8.83 EPS against a consensus estimate of $7.32. The surprise factor in the prior quarter was -$0.12. Based on analyst estimates, the high estimate for the next quarter is $10.06 and the low estimate is $8.97. The average estimate for the next quarter is thus $9.56.

Dividends & Yield:

In terms of dividends, LRCX has a current ratio of $6.9, which is $6.9 over the trailing 12-months, while a dividend of $4.2 is likely to be paid on average over the next five years. Dividend yield is another indicator that appeals to many investors, and LRCX currently yields $1.61. In the past year, LRCX’s dividend yield has been $1.61, but when looking at the stock over the past five years, its yield has been $1.39. Accordingly, LRCX has a current buyback yield of $7.28. This was $7.28 for the TTM, and it was $6.48 for the past five years.

Summary of Insider Activity:

Insiders traded LRCX stock several times over the past three months with 6 Buys and 22 Sells. In these transactions, 53,188 shares were bought while 36,944 shares were sold. The number of buy transactions has increased to 41 while that of sell transactions has risen to 89 over the past year. The total number of shares bought during that period was 183,407 while 157,035 shares were sold.

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