Applied Materials (AMAT) Hits 52-Week High On Strong Q2

Shares of Applied Materials, Inc. (NASDAQ:AMAT) hit a new 52-week high of $22.78 on May 20, eventually closing at $22.66. The company returned 12.5% in the past one-year period and has added approximately 21.4% year to date. Average volume of shares traded over the last three months was roughly 11,853K.

What is Driving Applied Materials?

Applied Materials is one of the world’s largest suppliers of fabrication equipment to semiconductor, LCD and solar PV cell manufacturers. Strength in mobility platforms, TV capacity builds, better utilization of resources and increased WFE spending are the major positives for the company.

The price appreciation can be attributed to Applied Materials’ strong fundamentals and better-than-expected second-quarter fiscal 2016 results reported on May 19. In response to strong earnings, the stock has gained 13.0%.

In the fiscal second quarter, Applied Materials reported earnings of 34 cents per share, surpassing the Zacks Consensus Estimate by 2 cents. Revenues of $2.45 billion were up 8.6% sequentially and 0.3% year over year and came above the Zacks Consensus Estimate. Growth was backed by higher demand in Southeast Asia, Korea and China and partially offset by lower demand in Taiwan, Europe, Japan and the U.S.

Moreover, the company provided a solid guidance for the upcoming quarter. Revenues are expected to increase 14–18 percentage points sequentially. Non-GAAP EPS is expected to come in a range of 46 cents to 50 cents, while the Zacks Consensus Estimate is pegged at 46 cents.

Also, Applied Materials has an impressive record of returning cash to shareholders through share buybacks and regular dividends payouts. In the second quarter, the company used $900 million to repurchase 45 million shares and paid $113 million as dividends.

Moreover, the company has well-differentiated products and high market share. Also, it is efficiently delivering key enabling technology to logic and foundry customers. The company is doing very well on the service front and has witnessed 10 consecutive quarters of year-on-year growth.

Additionally, Applied Materials delivered an average positive earnings surprise of nearly 3.46% over the trailing four quarters. The Zacks Rank #3 (Hold) company’s solid market position in China, expansion in display, continued innovation and strong long-term growth potential position it well.

Stocks to Consider

Some better-placed stocks in the technology space include TiVo Inc. (NASDAQ:TIVO) , Netgear Inc. (NASDAQ:NTGR) and Radcom Ltd. (NASDAQ:RDCM) , each sporting a Zacks Rank #1 (Strong Buy).

NETGEAR INC (NTGR): Free Stock Analysis Report

TIVO INC (TIVO): Free Stock Analysis Report

APPLD MATLS INC (AMAT): Free Stock Analysis Report

RADCOM LTD (RDCM): Free Stock Analysis Report

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