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Is Applied Materials, Inc. (AMAT) Stock Trading Below Fair Value?

Tuesday, September 27, 2022 10:58 AM | InvestorsObserver Analysts
Is Applied Materials, Inc. (AMAT) Stock Trading Below Fair Value?

Applied Materials, Inc. (AMAT) receives a strong valuation ranking of 71 from InvestorsObserver data analysis. The proprietary ranking system focuses on the underlying health of a company through analysis of its stock price, earnings, and growth rate. AMAT has a better value than 71% of stocks based on these valuation analytics. Investors primarily focused on buy-and-hold strategies will find the valuation ranking relevant to their goals when making investment decisions.

Valuation Rank - 71
AMAT gets a 71 Valuation Rank today. Find out what this means to you and get the rest of the rankings on AMAT!

Metrics Analysis

AMAT's trailing-12-month Price to Earnings (PE) ratio of 11.1 puts it around the historical average of roughly 15. AMAT is a average value at its current trading price as investors are paying around what its worth in relation to the company's earnings. AMAT's trailing-12-month earnings per share (EPS) of 7.47 does justify what it is currently trading at in the market. Trailing PE ratios, however, do not factor in a company's projected growth rate, resulting in some firms having high PE ratios due to high growth potentially enticing investors even if current earnings are low.
AMAT currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 1.5. The market is currently overvaluing AMAT in relation to its projected growth due to the PEG ratio being above the fair market value of 1. AMAT's PEG comes from its forward price to earnings ratio being divided by its growth rate. Because PEG ratios include more fundamentals of a company's overall health with additional focus on the future, they are one of the most used valuation metrics by analysts.

Summary

AMAT' has a weak valuation at its current share price on account of a overvalued PEG ratio due to strong growth. AMAT's PE and PEG are worse than the market average leading to a below average valuation score. Click Here to get the full Report on Applied Materials, Inc. (AMAT) stock.

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