Should You Buy Lam Research Stock Before Earnings?

by Rob Otman
lam research stock lam research earnings 0

Lam Research (Nasdaq: LRCX) is a $30 billion company today. Investors that bought shares one year ago are sitting on a 98.31% total return. That's above the S&P 500's return of 18%.

Lam Research stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question, we've turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics...

Earnings-per-Share (EPS) Growth: Lam Research reported a recent EPS growth rate of 100.62%. That's below the semiconductor industry average of 183.79%. That's not a good sign. We like to see companies that have higher earnings growth.

Price-to-Earnings (P/E): The average price-to-earnings ratio of the semiconductor industry is 44.53. And Lam Research's ratio comes in at 20. It's trading at a better value than many of its competitors.

Debt-to-Equity The debt-to-equity ratio for Lam Research stock is 42%. That's below the semiconductor industry average of 55.02%. The company is less leveraged.

Free Cash Flow per Share Growth Lam Research's FCF has been lower than that of its competitors over the last year. That's not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.

Profit Margins The profit margin of Lam Research comes in at 22.45% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Lam Research's profit margin is above the semiconductor average of 15.99%. So that's a positive indicator for investors.

Return on Equity Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Lam Research is 26.71%, and that's above its industry average ROE of 16.45%.

Lam Research stock passes four of our six key metrics today. That's why our Investment U Stock Grader rates it as a Buy With Caution.

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Equity LifeStyle Properties stock passes two of our six key metrics today. That's why our Investment U Stock Grader rates it as a Buy With Caution.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That's why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.

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