Why Applied Materials Is Up 46% This Year

Markets Motley Fool

What happened

Continue Reading Below

Shares of the semiconductor equipment maker Applied Materials (NASDAQ: AMAT) have risen 46% this year, according to data provided by S&P Global Market Intelligence, after the company reported two strong quarters that surpassed analysts' expectations.

So what

Applied Materials began its slow and steady ascent this year after the company reported a strong first-quarter 2017 in February. Sales increased 45% year over year to $3.28 billion, and the company's non-GAAP (generally accepted accounting principles) earnings per share of $0.67 set an all-time record for the company. That bested analysts' consensus forecast of $0.66 EPS and helped start the company's share-price rise.

Then in May, Applied reported its second-quarter 2017 earnings, with sales jumping by 45% year over year to $3.55 billion and non-GAAP earnings per share popping 132% to $0.79. That easily beat the analysts' consensus earnings of $0.76 for the quarter.

It was a banner quarter for the company, with CEO Gary Dickerson saying in a press release: "Applied Materials delivered the highest quarterly revenue and earnings in our history, and we've now set new earnings records for four quarters in a row."

Continue Reading Below

All of that good news continued to push investor sentiment for Applied Material's shares even higher through May and into June.

Now what

Investors likely have more to look forward to with Applied's stock price, as the company is forecasting third-quarter revenue between $3.6 billion and $3.75 billion, which would be about a 30% increase at the midpoint. Earnings per share are expected to rise 66% year over year at the midpoint, and if they come in at the high end of management's guidance of $0.87, the company will surpass analysts' consensus once again.

10 stocks we like better than Applied Materials
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Applied Materials wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of July 6, 2017

Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.