ASML (ASML) has been one of the most trending stocks recently among Zacks.com visitors. Therefore, we recommend considering several factors that can affect a stock's short-term performance.
Over the past month, shares of this company, which supplies equipment to semiconductor manufacturers, have risen +3.6%. This compares to a +2.1% change in the Zacks S&P 500 Composite Index. During this period, the Zacks Semiconductor Equipment – Wafer Manufacturing industry, which ASML belongs to, rose 3.2%. The key question here is: What is the future direction of the stock price?
Although media reports and rumors about material changes in a company's business prospects typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, which causes the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
ASML is expected to post earnings of $2.85 per share for the current quarter, representing a year-over-year change of -46.3%. The Zacks Consensus Estimate remained unchanged over the past 30 days.
The consensus earnings estimate for the current fiscal year of $20.45 represents a -5% change from the prior year. This estimate has changed by +0.1% over the past 30 days.
Next year's consensus earnings estimate of $28.96 represents a +41.6% change from the revenue that ASML would have reported a year ago. Over the past month, the forecast has changed by +1.1%.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, leverages the power of earnings estimate revisions to provide a more definitive picture on near-term stock price direction. To do. The magnitude of the recent change in consensus estimates, as well as three other factors related to earnings expectations, give ASML a Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's consensus EPS estimate for the next 12 months.
12 months EPS
Expected revenue growth rate
Earnings growth is arguably the best indicator of a company's financial health, but nothing will happen if a company can't grow its revenue. After all, it's nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it's important to know a company's earnings growth potential.
For ASML, the consensus revenue estimate for the current quarter is $5.73 Billion, representing a year-over-year change of -20.9%. Estimates for the current and next fiscal year are $30.46 billion and $38 billion, representing changes of +2.2% and +24.7%, respectively.
Last reported results and surprising details
ASML reported revenue of $7.79 billion in its last reported quarter. This represents a year-over-year change of +18.7%. EPS for the same period was $5.60, compared to $4.70 a year ago.
The reported revenue represents a surprise of +6.2% when compared to the Zacks Consensus Estimate of $7.34 billion. EPS surprise was +9.38%.
The company beat consensus EPS estimates in each of the trailing four quarters. He's the only time the company has exceeded consensus revenue estimates during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
Zacks Value Style Score (part of the Zacks Style Scores system). We pay close attention to both traditional and non-traditional metrics and rate stocks from A to F (A is better than B, B is better than C, and A is better than B. is also very useful in identifying whether a stock is overvalued, well-valued, or temporarily undervalued.
ASML is rated D on this score, indicating that it trades at a premium relative to its industry peers. Click here to see the values ​​of some of the metrics that determined this grade.
conclusion
The facts discussed here, and many others on Zacks.com, may help you decide whether the market buzz regarding ASML is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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