Lam Research (Nasdaq: 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.