It hasn't been a great afternoon session for Advanced Micro Devices investors, who have watched their shares sink by -1.7% to a price of $116.58. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Advanced Micro Devices Has an Attractive P/B Ratio but a Worrisome P/E Ratio:
Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Advanced Micro Devices has a trailing 12 month P/E ratio of 1059.8 and a P/B ratio of 3.43.
Advanced Micro Devices's PEG ratio is 4.63, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $6,475 | $6,731 | $9,763 | $16,434 | $23,601 | $21,876 |
| Gross Margins | 38% | 43% | 45% | 48% | 45% | 44% |
| Operating Margins | 7.0% | 9.0% | 14.0% | 22.0% | 5.0% | 5.0% |
| Net Margins | 5.0% | 5.0% | 26.0% | 19.0% | 6.0% | 0.0% |
| Net Income (MM) | $337 | $341 | $2,490 | $3,162 | $1,320 | -$25 |
| Net Interest Expense (MM) | $121 | $94 | $47 | $55 | $88 | $143 |
| Depreciation & Amort. (MM) | $170 | $222 | $312 | $407 | $4,174 | $4,216 |
| Earnings Per Share | $0.32 | $0.3 | $2.06 | $2.57 | $0.84 | -$0.06 |
| Diluted Shares (MM) | 1,064 | 1,120 | 1,207 | 1,229 | 1,571 | 1,767 |
| Free Cash Flow (MM) | -$129 | $276 | $777 | $3,220 | $3,115 | $1,867 |
| Capital Expenditures (MM) | $163 | $217 | $294 | $301 | $450 | $530 |
| Net Current Assets (MM) | $1,349 | $2,059 | $3,540 | $4,007 | $6,894 | $7,054 |
| Long Term Debt (MM) | $1,114 | $486 | $330 | $1 | $2,467 | $1,714 |
| Net Debt / EBITDA | 0.27 | -1.15 | -0.75 | -0.55 | -0.44 | -0.25 |
Advanced Micro Devices has growing revenues and increasing reinvestment in the business, low leverage, and generally positive cash flows. However, Advanced Micro Devices has slimmer gross margins than its peers, weak operating margins with a stable trend, and declining EPS growth.
