STMicroelectronics (STM) Gains But Lags Market: What You Should Know

STMicroelectronics (STM) closed at $27.83 in the latest trading session, marking a +1.57% move from the prior day. This change lagged the S&P 500's 3.25% gain on the day. At the same time, the Dow added 3.84%, and the tech-heavy Nasdaq gained 3.06%.

Coming into today, shares of the chip company had lost 7.09% in the past month. In that same time, the Computer and Technology sector lost 8.18%, while the S&P 500 lost 9.87%.

STM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.26, up 30% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.36 billion, up 13.68% from the year-ago period.

STM's full-year Zacks Consensus Estimates are calling for earnings of $1.53 per share and revenue of $10.74 billion. These results would represent year-over-year changes of +33.04% and +12.34%, respectively.

Investors should also note any recent changes to analyst estimates for STM. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. STM is currently sporting a Zacks Rank of #1 (Strong Buy).

In terms of valuation, STM is currently trading at a Forward P/E ratio of 17.94. This represents a discount compared to its industry's average Forward P/E of 18.39.

We can also see that STM currently has a PEG ratio of 3.59. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Semiconductor - General industry currently had an average PEG ratio of 2.47 as of yesterday's close.

The Semiconductor - General industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 37, putting it in the top 15% 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.

To follow STM in the coming trading sessions, be sure to utilize Zacks.com.