Mellanox (MLNX) Gains But Lags Market: What You Should Know

Mellanox (MLNX) closed the most recent trading day at $120.50, moving +0.53% from the previous trading session. This change lagged the S&P 500's 6.24% gain on the day. At the same time, the Dow added 6.38%, and the tech-heavy Nasdaq gained 5.6%.

Prior to today's trading, shares of the semiconductor company had gained 0.04% over the past month. This has outpaced the Computer and Technology sector's loss of 17.19% and the S&P 500's loss of 21.22% in that time.

Investors will be hoping for strength from MLNX as it approaches its next earnings release. On that day, MLNX is projected to report earnings of $1.75 per share, which would represent year-over-year growth of 10.06%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $346.45 million, up 13.51% from the year-ago period.

MLNX's full-year Zacks Consensus Estimates are calling for earnings of $7.60 per share and revenue of $1.46 billion. These results would represent year-over-year changes of +6.29% and +9.67%, respectively.

It is also important to note the recent changes to analyst estimates for MLNX. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. MLNX is currently a Zacks Rank #1 (Strong Buy).

Looking at its valuation, MLNX is holding a Forward P/E ratio of 15.77. This represents a premium compared to its industry's average Forward P/E of 15.29.

Meanwhile, MLNX's PEG ratio is currently 0.86. 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. MLNX's industry had an average PEG ratio of 1.69 as of yesterday's close.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 31, which puts it in the top 13% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.