Applied Materials Earnings Preview: Can Good News Halt Stock's Slide?

Applied Materials AMAT will be reporting its fiscal second-quarter 2011 results Tuesday, May 24, after the closing bell. Analysts are looking for the tech company to post earnings of $0.37 per share on revenue of $2.8 billion. That is up from $0.22 per share on $2.3 billion in the same period of last year. The consensus earnings estimate is unchanged from 60 days ago. Santa Clara, California-based Applied Materials is the world's largest maker of semiconductor production equipment. The company also produces equipment used in making solar power cells. Most of the company's sales come from Taiwan and the rest of the Asia/Pacific region. Goldman Sachs recently downgraded the stock and lowered its price target, citing an expected decline in capital expenditure spending in the semiconductor industry in 2012. Yet, looking ahead to the third quarter, analysts so far expect to see sequential and year-over-year growth in both per-share earnings and revenues. Note that Applied Materials earnings have topped consensus estimates in the past four quarters; the beat was by 9.7% in the first quarter. Applied Materials has a dividend yield of 2.0%, a long-term earnings per share growth forecast of 11.0% and a price-to-earnings ratio that is less than the electronics industry average. But the share price has fallen about 12% in recent weeks and opened today at $14.28. The stock has underperformed its industry average and the broader markets since the beginning of the year.