STMicroelectronics (STM) Plunges More Than Broader Markets: What You Need to Know

Last trading session, STMicroelectronics (STM) closed at $48.03, marking a -1.11% move from the previous day. That move lagged the S&P 500’s 1.1% daily loss. Elsewhere, the Dow Jones lost 1.19%, while the tech-heavy Nasdaq lost 3.27%.

Prior to today’s session, shares of the chip company had lost 1.2% over the past month. This was lower than the 1.45% gain in the IT & Technology sector and was narrower than the S&P 500’s 3.02% loss during this period.

Investors are hoping for strength from STMicroelectronics as it approaches its next earnings release. The company is expected to post EPS of $0.96, up 21.52% from the prior year quarter.

For the full year, our Zacks consensus estimates call for earnings of $4.05 per share and revenue of $17.05 billion, which would represent swings of -3.34% and +5, 71%, respectively, compared to the previous year.

Investors might also notice recent changes in analyst estimates for STMicroelectronics. These revisions generally reflect the latest short-term trading trends, which may change frequently. Therefore, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Research indicates that these revisions to estimates are directly correlated to near-term stock price dynamics. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven track record of outperformance, with #1 stocks returning an average of +25% per year since 1988. In the past 30 days, our consensus EPS projection has increased by 0.12%. STMicroelectronics currently sports a Zacks rank of #3 (Hold).

In terms of valuation, STMicroelectronics is currently trading at a Forward P/E ratio of 12. For comparison, its sector has an average Forward P/E of 23.53, which means STMicroelectronics is trading at a discount to to the group.

We can also see that STM currently has a PEG ratio of 2.4. This popular measure is similar to the widely known P/E ratio, except that the PEG ratio also takes into account the company’s expected earnings growth rate. The STM industry had an average PEG ratio of 2.89 at yesterday’s close.

The Semiconductors – General industry is part of the Information Technology sector. This industry currently has a Zacks Industry Rank of 194, which places it in the bottom 24% of all 250+ industries.

The Zacks Industry Ranking assesses the strength of our individual industry groups by measuring the average Zacks Ranking of individual stocks within the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.