Today we're going to take a closer look at large-cap Technology company Advanced Micro Devices, whose shares are currently trading at $128.92. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
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 35.0 and an average price to book (P/B) ratio of 7.92. In contrast, Advanced Micro Devices has a trailing 12 month P/E ratio of 1074.3 and a P/B ratio of 3.79.
Advanced Micro Devices's PEG ratio is 4.94, 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 | $22,111 |
| Revenue Growth | n/a | 3.95% | 45.05% | 68.33% | 43.61% | -6.31% |
| Gross Margins | 38% | 43% | 45% | 48% | 45% | 45% |
| Operating Margins | 7% | 9% | 14% | 22% | 5% | 5% |
| Net Margins | 5% | 5% | 26% | 19% | 6% | 1% |
| Net Income (MM) | $337 | $341 | $2,490 | $3,162 | $1,320 | $208 |
| Net Interest Expense (MM) | $121 | $94 | $47 | $55 | $88 | $180 |
| Depreciation & Amort. (MM) | $170 | $222 | $312 | $407 | $4,174 | $4,216 |
| Earnings Per Share | $0.32 | $0.3 | $2.06 | $2.57 | $0.84 | $0.08 |
| EPS Growth | n/a | -6.25% | 586.67% | 24.76% | -67.32% | -90.48% |
| Diluted Shares (MM) | 1,064 | 1,120 | 1,207 | 1,229 | 1,571 | 1,771 |
| Free Cash Flow (MM) | -$129 | $276 | $777 | $3,220 | $3,115 | $1,322 |
| Capital Expenditures (MM) | $163 | $217 | $294 | $301 | $450 | $531 |
| Current Ratio | 1.78 | 1.95 | 2.54 | 2.02 | 2.36 | 2.19 |
| Long Term Debt (MM) | $1,114 | $486 | $330 | $1 | $2,467 | $1,715 |
| Net Debt / EBITDA | 0.27 | -1.15 | -0.75 | -0.55 | -0.44 | -0.2 |
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.
