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Semtech (SMTC) Gains But Lags Market: What You Should Know

Semtech (SMTC) closed the most recent trading day at $87.61, moving +0.13% from the previous trading session.

This story originally appeared on Zacks

Semtech (SMTC) closed the most recent trading day at $87.61, moving +0.13% from the previous trading session. This change lagged the S&P 500's 0.37% gain on the day.

- Zacks

Heading into today, shares of the chipmaker had gained 11.72% over the past month, outpacing the Computer and Technology sector's gain of 5.35% and the S&P 500's gain of 5.96% in that time.

SMTC will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.71, up 51.06% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $192.92 million, up 25.21% from the prior-year quarter.

SMTC's full-year Zacks Consensus Estimates are calling for earnings of $2.54 per share and revenue of $735.71 million. These results would represent year-over-year changes of +45.14% and +23.62%, respectively.

Investors might also notice recent changes to analyst estimates for SMTC. 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.

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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.76% lower within the past month. SMTC currently has a Zacks Rank of #4 (Sell).

Digging into valuation, SMTC currently has a Forward P/E ratio of 34.5. This represents a premium compared to its industry's average Forward P/E of 24.52.

We can also see that SMTC currently has a PEG ratio of 2.76. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor - Analog and Mixed was holding an average PEG ratio of 1.24 at yesterday's closing price.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 43, which puts it in the top 17% of all 250+ industries.

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

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