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Advanced Micro Devices, Inc. (NASDAQ:AMD) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of AMD, it is a financially-healthy company with an impressive track record and an optimistic future outlook. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Advanced Micro Devices here.
High growth potential with proven track record
AMD is an attractive stock for growth-seeking investors, with an expected earnings growth of 48% in the upcoming year which is expected to flow into an impressive return on equity of 36% over the next couple of years. In the past couple of years, AMD has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did AMD outperformed its past performance, its growth also surpassed the Semiconductor industry expansion, which generated a 37% earnings growth. This is an optimistic signal for the future.
AMD’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that AMD has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. Debt funding requires timely payments on interest to lenders. AMD’s earnings sufficiently covered its interest in the prior year, which indicates there’s low risk associated with the company not being able to meet these key expenses.
Next Steps:
For Advanced Micro Devices, there are three key aspects you should further examine:
- Valuation: What is AMD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AMD is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does AMD return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from AMD as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AMD? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.