Breaking Down Block (SQ) Stock Before Q3 Earnings

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STMicroelectronics (STM) closed the most recent trading day at $38.67, moving -0.21% from the previous trading session. This change lagged the S&P 500’s 0.12% loss on the day. At the same time, the Dow added 0.1%, and the tech-heavy Nasdaq gained 0.05%.

Prior to today’s trading, shares of the chip company had gained 29.56% over the past month. This has outpaced the Computer and Technology sector’s gain of 8.67% and the S&P 500’s gain of 5.93% in that time.

STMicroelectronics will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.13, up 37.8% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.44 billion, up 24.73% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4 per share and revenue of $16.12 billion, which would represent changes of +85.19% and +26.33%, respectively, from the prior year.

Any recent changes to analyst estimates for STMicroelectronics should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.95% higher. STMicroelectronics is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, STMicroelectronics currently has a Forward P/E ratio of 9.69. This represents a discount compared to its industry’s average Forward P/E of 10.69.

Investors should also note that STM has a PEG ratio of 1.94 right now. 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 2.04 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 160, putting it in the bottom 37% 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.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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