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Advanced Micro Devices

Nasdaq:AMD
Snowflake Description

High growth potential with imperfect balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
AMD
Nasdaq
$11B
Market Cap
  1. Semiconductors and Semiconductor Equipment
Company description

Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. More info.


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3 Month History
AMD
Industry
5yr Volatility vs Market

Value

 Is Advanced Micro Devices undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Advanced Micro Devices to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Advanced Micro Devices is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Advanced Micro Devices's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Advanced Micro Devices's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Advanced Micro Devices is loss making, we can't compare it's value to the US Semiconductors and Semiconductor Equipment industry average.
  • Advanced Micro Devices is loss making, we can't compare the value of its earnings to the US market.
Price based on expected Growth
Does Advanced Micro Devices's expected growth come at a high price?
  • Advanced Micro Devices is loss making, we can't assess if it's growth is good value.
Price based on value of assets
What value do investors place on Advanced Micro Devices's assets?
  • Advanced Micro Devices is overvalued based on assets compared to the US Semiconductors and Semiconductor Equipment industry average.
X
Value checks
We assess Advanced Micro Devices's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Semiconductors and Semiconductor Equipment industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Semiconductors and Semiconductor Equipment industry average (and greater than 0)? (1 check)
  5. Advanced Micro Devices has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (0%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for Advanced Micro Devices is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$967

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $418 × (1 + 2.47%) ÷ (10.77% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$5,162

Present value of terminal value:
$3,096

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$4,063 = $967 + $3,096

Value = Total value / Shares Outstanding ($4,063 / 965)

Discount to Share Price

Value per share:
$4.21

Current discount (share price of $11.37): -169.98%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 10.77% = 2.47% + (1.102 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($10,969,760,116).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

1.102 = 1.01 (1 + (1- 30%) (13%))

Levered Beta used in calculation = 1.102



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Advanced Micro Devices expected to perform in the next 1 to 3 years based on estimates from 28 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
80.1%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Advanced Micro Devices expected to grow at an attractive rate?
  • Advanced Micro Devices's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • Advanced Micro Devices's earnings growth is expected to exceed the US market average.
  • Advanced Micro Devices's revenue growth is expected to exceed the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Advanced Micro Devices's earnings are expected to grow significantly at over 20% yearly.
  • Advanced Micro Devices's revenue is expected to grow by 10.8% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Advanced Micro Devices is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Semiconductors and Semiconductor Equipment industry average.
  • An improvement in Advanced Micro Devices's performance (ROE) is expected over the next 3 years.
X
Future performance checks
We assess Advanced Micro Devices's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Advanced Micro Devices has a total score of 5/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Advanced Micro Devices performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Advanced Micro Devices's growth in the last year to its industry (Semiconductors and Semiconductor Equipment).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Advanced Micro Devices does not currently make a profit.
Earnings and Revenue History
Advanced Micro Devices's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Advanced Micro Devices has negative negative earnings from operations, therefore its ROE is meaningless.
  • Advanced Micro Devices had negative or no Return on Assets (ROA) last year.
  • Return based on revenue producing assets (ROCE) is negative or zero.
X
Past performance checks
We assess Advanced Micro Devices's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Semiconductors and Semiconductor Equipment industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Advanced Micro Devices has a total score of 0/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Advanced Micro Devices's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Advanced Micro Devices's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Advanced Micro Devices is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Advanced Micro Devices's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Advanced Micro Devices's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is covered by total short term assets, assets are 1.9x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Advanced Micro Devices's level of debt (274.2% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (253.3% vs 274.2% today).
  • Total debt is not well covered by annual operating cash flow (-8.9%, less than 20% of total debt).
  • Advanced Micro Devices is making a loss, therefore interest on debt is not well covered by earnings.
X
Financial health checks
We assess Advanced Micro Devices's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Advanced Micro Devices has a total score of 2/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Advanced Micro Devices's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from Advanced Micro Devices dividends.
If you bought $2,000 of Advanced Micro Devices shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Not paying a dividend.
  • Not paying a dividend.
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of Advanced Micro Devices's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
X
Income/ dividend checks
We assess Advanced Micro Devices's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Advanced Micro Devices afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Advanced Micro Devices has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Advanced Micro Devices's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Lisa Su, image provided by Google.
Lisa Su
COMPENSATION $11,724,775
AGE 47
TENURE AS CEO 3.3 years
CEO Bio

Dr. Lisa T. Su has been the Chief Executive Officer and President of Advanced Micro Devices, Inc. since August 10, 2014 and October 2014 respectively. Dr. Su served as Chief Operating Officer of Advanced Micro Devices, Inc. from July 1, 2014 to October 2014. She served as Senior Vice President and General Manager of Global Business Unit at Advanced Micro Devices, Inc. from January 3, 2012 to July 2014. She served as Senior Vice President of Freescale Semiconductor Holdings I Ltd. from June 18, 2007 to December 2011 and served as its General Manager of Networking and Multimedia from September 2008 to December 2011. She is a highly-respected technology executive and has an Outstanding Record of business execution. She has an impressive track record and solid understanding of the semiconductor industry. She served as Senior Vice President and General Manager of Networking and Multimedia of Freescale Semiconductor Inc. from 2007 to 2011. Dr. Su served as the Chief Technology Officer of Freescale Semiconductor Holdings I Ltd. from June 18, 2007 to August 2009. She served as the Chief Technology Officer of Freescale Semiconductor Inc. since June 18, 2007. Dr. Su is a respected industry leader with more than 13 years of experience in technology development, product management and strategic alliances. She served as Vice President of Semiconductor Research and Development Center at International Business Machines Corp. since October 2005. She joined Freescale from IBM, where she served in various capacities including Vice President of Semiconductor Research and Development, Vice President of Technology Development and Alliances in the IBM Systems and Technology Group. Dr. Su served as a Director of the PowerPCTMproduct line and Emerging Products from 1995 to June 2007. She served in various technical and business positions at IBM including Vice President of Technology Development. She has been a Director of Analog Devices, Inc. since June 7, 2012 and Advanced Micro Devices, Inc. since October 8, 2014. She has authored or co-authored more than 40 technical publications and co-authored a book chapter on next-generation consumer electronics. She was named in MIT Technology Review's Top 100 Young Innovators in 2002 and received the YWCA 2003 Outstanding Achievement Award for Business. She is a Fellow of the Institute of Electronics and Electrical Engineers (IEEE). Dr. Su received B.S., M.S., and Doctorate Degrees in Electrical Engineering from the Massachusetts Institute of Technology.

CEO Compensation
  • Lisa's compensation has increased whilst company is loss making.
  • Lisa's compensation is higher than average for a company of this size and profit level.
Management Team Tenure

Average tenure and age of the Advanced Micro Devices management team in years:

4.2
Average Tenure
53.6
Average Age
  • The tenure for the Advanced Micro Devices management team is about average.
Management Team

Lisa Su

TITLE
President
COMPENSATION
$12M
AGE
47
TENURE
3.3 yrs

Devinder Kumar

TITLE
Senior VP
COMPENSATION
$4M
AGE
61
TENURE
4.8 yrs

Mark Papermaster

TITLE
Chief Technology Officer and Senior VP of Technology & Engineering
COMPENSATION
$4M
AGE
55
TENURE
6.1 yrs

Forrest Norrod

TITLE
Senior VP and GM of Enterprise
COMPENSATION
$4M
AGE
52
TENURE
3.1 yrs

Jim Anderson

TITLE
Senior VP and GM of Computing & Graphics Business Group
COMPENSATION
$4M
AGE
45
TENURE
2.5 yrs

Chekib Akrout

TITLE
Senior Vice President of Global Operations
AGE
59
TENURE
0.7 yrs

Darla Smith

TITLE
Chief Accounting Officer
AGE
51
TENURE
1.5 yrs

Ruth Cotter

TITLE
Chief HR Officer and Senior VP of Corporate Communications & IR
TENURE
1.7 yrs

Harry Wolin

TITLE
Senior VP & General Counsel
COMPENSATION
$2M
AGE
54
TENURE
13.4 yrs

Jim Keller

TITLE
Chief Architect of Microprocessor Cores and Corporate Vice President
AGE
58
TENURE
5.2 yrs
Board of Directors Tenure

Average tenure and age of the Advanced Micro Devices board of directors in years:

4.3
Average Tenure
59.1
Average Age
  • The tenure for the Advanced Micro Devices board of directors is about average.
Board of Directors

John Caldwell

TITLE
Chairman
COMPENSATION
$437K
AGE
67
TENURE
1.5 yrs

Lisa Su

TITLE
President
COMPENSATION
$12M
AGE
47
TENURE
3.1 yrs

W. Sanders

TITLE
Chairman Emeritus
COMPENSATION
$2M
AGE
80
TENURE
13.8 yrs

Nick Donofrio

TITLE
Independent Director
COMPENSATION
$338K
AGE
72
TENURE
8 yrs

Nora Denzel

TITLE
Independent Director
COMPENSATION
$316K
AGE
55
TENURE
3.7 yrs

Joe Householder

TITLE
Independent Director
COMPENSATION
$328K
AGE
62
TENURE
3.2 yrs

Ahmed Al Idrissi

TITLE
Non-Independent Director
COMPENSATION
$293K
AGE
44
TENURE
5 yrs

Mike Inglis

TITLE
Independent Director
COMPENSATION
$323K
AGE
57
TENURE
3.7 yrs

John Marren

TITLE
Independent Director
AGE
54
TENURE
0.8 yrs

Abhi Talwalkar

TITLE
Independent Director
AGE
53
TENURE
0.4 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
X
Management checks
We assess Advanced Micro Devices's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Advanced Micro Devices has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. Its primarily offers x86 microprocessors as an accelerated processing unit (APU), chipsets, discrete graphics processing units (GPUs), and professional graphics; and server and embedded processors, and semi-custom System-on-Chip (SoC) products and technology for game consoles. The company provides x86 microprocessors for desktop PCs under the AMD A-Series, AMD E-Series, AMD FX CPU, AMD Athlon CPU and APU, AMD Sempron APU and CPU, and AMD Pro A-Series APU brands; and microprocessors for notebook and 2-in-1s under the AMD A-Series, AMD E-Series, AMD C-Series, AMD Z-Series, AMD FX APU, AMD Phenom, AMD Athlon CPU and APU, AMD Turion, and AMD Sempron APU and CPU brand names. It also offers chipsets with and without integrated graphics features for desktop, notebook PCs, and servers, as well as controller hub-based chipsets for its APUs under the AMD brand; and AMD PRO mobile and desktop PC solutions. In addition, the company provides discrete GPUs for desktop and notebook PCs under the AMD Radeon brand; professional graphics products under the AMD FirePro brand name; and customer-specific solutions based on AMD’s CPU, GPU, and multi-media technologies. Further, it offers microprocessors for server platforms under the AMD Opteron; embedded processor solutions for interactive digital signage, casino gaming, and medical imaging under the AMD Opteron, AMD Athlon, AMD Sempron, AMD Geode, AMD R-Series, and G-Series brand names; and semi-custom SoC products that power the Sony Playstation 4, Microsoft Xbox One, and Xbox One S game consoles. The company sells its products through its direct sales force, independent distributors, and sales representatives. It primarily serves original equipment manufacturers, original design manufacturers, system builders, and independent distributors. Advanced Micro Devices, Inc. was founded in 1969 and is headquartered in Sunnyvale, California.

Details
Name: Advanced Micro Devices, Inc.
Ticker: AMD
Exchange: NasdaqCM
Founded: 1969
Market Cap: $10,969,760,116
Shares outstanding: 964,798,603
Website: http://www.amd.com
Address: Advanced Micro Devices, Inc.
One AMD Place,
PO Box 3453,
Sunnyvale,
California, 94088,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqCM AMD Common Stock Nasdaq Capital Market US USD 14. Dec 1972
DB AMD Common Stock Deutsche Boerse AG DE EUR 14. Dec 1972
XTRA AMD Common Stock XETRA Trading Platform DE EUR 14. Dec 1972
SWX AMD Common Stock SIX Swiss Exchange CH CHF 14. Dec 1972
SWX AMD Common Stock SIX Swiss Exchange CH CHF 14. Dec 1972
BMV AMD * Common Stock Bolsa Mexicana de Valores MX MXN 14. Dec 1972
Number of employees
Current staff
Staff numbers
8,200
Advanced Micro Devices employees.
Industry
Industry: Semiconductors
Sector: Semiconductors and Semiconductor Equipment