The current share price of
Advanced Micro Devices
is above its future cash flow value.
Often investors are willing to pay a
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
is considered below, and whether this is a fair price.
Price based on past earnings
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 overvalued based on earnings compared to the US Semiconductor industry average.
Advanced Micro Devices is overvalued based on earnings compared to the US market.
Price based on expected Growth
Advanced Micro Devices's expected growth come at a high price?
Advanced Micro Devices is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on
Advanced Micro Devices's
Advanced Micro Devices is overvalued based on assets compared to the US Semiconductor industry average.
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.
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 ($10,767,053,609).
The risk free rate of
2.47% is from the 10 year government bond rate in
The bottom-up beta is estimated by analysing other companies in the same
The Equity Risk Premium is calculated by subtracting the risk free rate from
the market return premium (7.53%) (source: Buffet).
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.
The future performance of a company is measured in the same way as past
performance, by looking at estimated
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
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Advanced Micro Devices
expected to grow at an
Advanced Micro Devices's earnings growth is expected to exceed the low risk savings rate of 4.5%.
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
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 10.3% 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 efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).
Advanced Micro Devices's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
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.
A company's financial position is much like your own financial position,
it includes everything you own
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.
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.
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
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 1.9x debt.
Nearly all companies have debt. Debt in itself isn’t
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 (228.3%) compared to net worth is high (greater than 40%).
The level of debt compared to net worth has been reduced over the past 5 years (382.3% vs 228.3% today).
Debt is not well covered by operating cash flow (4.9%, less than 20% of total debt).
Interest payments on debt are not well covered by earnings (EBIT is 1.7x annual interest expense, ideally 3x coverage).
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.
TENURE AS CEO
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.
Lisa's compensation has been consistent with company performance over the past year.
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:
The tenure for the Advanced Micro Devices management team is about average.
Chief Technology Officer and Senior VP of Technology & Engineering
Senior VP and GM of Datacenter & Embedded Solutions Business Group
Senior VP and GM of Computing & Graphics Business Group
Senior Vice President of Global Operations
Chief Accounting Officer
Chief HR Officer and Senior VP of Worldwide Marketing& IR
Chief Architect of Microprocessor Cores and Corporate Vice President
Board of Directors Tenure
Average tenure and age of the
Advanced Micro Devices
board of directors in years:
The tenure for the Advanced Micro Devices board of directors is about average.
Is Advanced Micro Devices Inc's (NASDAQ:AMD) Growth Strong Enough To Justify Its March Share Price?
Advanced Micro Devices is poised for extremely high earnings growth in the near future. … AMD is trading at a very high price-to-earnings (PE) ratio of 255.05x, meaning Advanced Micro Devices is overvalued based on current earnings compared to the semiconductor industry average of 27.17x , and overvalued compared to the US market average ratio of 18.83x. … A PE ratio of 255.05x and expected year-on-year earnings growth of 57.28% give Advanced Micro Devices a quite high PEG ratio of 4.45x.
What Do Analysts Think About The Future Of Advanced Micro Devices Inc's (NASDAQ:AMD) Business?
Below is a brief commentary on my key takeaways on how market analysts predict Advanced Micro Devices's earnings growth trajectory over the next couple of years and whether the future looks brighter. … Check out our latest analysis for Advanced Micro Devices Analysts' expectations for next year seems positive, with earnings growth more than doubling. … This means that, we can presume Advanced Micro Devices will grow its earnings by 57.14% every year for the next couple of years.
Advanced Micro Devices Inc (NASDAQ:AMD): What Is Driving Margins?
To get a preliminary understanding, I will try to evaluate Advanced Micro Devices's margin behaviour so investors can evaluate the revenue and cost drivers behind future earnings projections and understand how they may impact on returns compared to the industry. … Margin Calculation for AMD Profit Margin = Net Income ÷ Revenue ∴ Profit Margin = 43.00 Million ÷ 5.33 Billion = 0.81% The past five years have seen Advanced Micro Devices's margin contract, with net income declining at -16.50% on average, which was faster than the average fall in revenue of -6.47%, meaning that the decrease in revenue has coincided with a smaller portion falling to the bottom line. … Using Advanced Micro Devices's margin expectations as a way to understand projections for the future It is expected that margins will transition into expansion, with 10.31% in expected annual revenue growth and 57.14% earnings growth expected annually.
What You Must Know About Advanced Micro Devices Inc's (NASDAQ:AMD) Return on Equity
View our latest analysis for Advanced Micro Devices Breaking down ROE — the mother of all ratios Firstly, Return on Equity, or ROE, is simply the percentage of last years’ earning against the book value of shareholders’ equity. … This means Advanced Micro Devices’s returns actually do not cover its own cost of equity, with a discrepancy of -3.30%. … Advanced Micro Devices’s ROE is underwhelming relative to the industry average, and its returns were also not strong enough to cover its own cost of equity.
Does Advanced Micro Devices Inc's (NASDAQ:AMD) Debt Level Pose A Problem?
See our latest analysis for Advanced Micro Devices How does AMD’s operating cash flow stack up against its debt? … On top of this, AMD has produced cash from operations of $90.0M during the same period of time, resulting in an operating cash to total debt ratio of 6.27%, meaning that AMD’s current level of operating cash is not high enough to cover debt. … Considering Advanced Micro Devices’s total debt outweighs its equity, the company is deemed highly levered.
Is Advanced Micro Devices Inc (NASDAQ:AMD) Undervalued?
Since Advanced Micro Devices’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. … Advanced Micro Devices’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. … If you believe Advanced Micro Devices should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable.
Interested In Advanced Micro Devices Inc (AMD)? Here's What Its Recent Track-Record Looks Like
Investors may find my commentary, albeit very high-level and brief, on Advanced Micro Devices Inc (NASDAQ:AMD) useful as an attempt to give more color around how Advanced Micro Devices is currently performing. … Check out our latest analysis for Advanced Micro Devices Did AMD's recent EPS Growth beat the long-term trend and the industry? … For Advanced Micro Devices, the latest twelve-month earnings -$69.0M, which, relative to the previous year's figure, has become less negative.
What does Advanced Micro Devices Inc's (AMD) Balance Sheet Tell Us Abouts Its Future?
See our latest analysis for AMD Is AMD’s level of debt at an acceptable level? … NasdaqCM:AMD Historical Debt Oct 25th 17 A simple way to determine whether the company has put debt into good use is to look at its operating cash flow against its debt obligation. … In the case of AMD, operating cash flow turned out to be -0.12x its debt level over the past twelve months.
Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. It operates in two segments, Computing and Graphics; and Enterprise, Embedded and Semi-Custom. The company’s products include x86 microprocessors as an accelerated processing unit (APU), chipsets, discrete and integrated graphics processing units (GPUs), and professional GPUs; and server and embedded processors, and semi-custom System-on-Chip (SoC) products and technology for game consoles. It provides x86 microprocessors for desktop PCs under the AMD Ryzen, AMD Ryzen Pro, Threadripper, 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; microprocessors for notebook and 2-in-1s under the AMD Ryzen processors with Radeon Vega GPUs, 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 brands; and microprocessors for servers under the AMD EPYC and AMD Opteron brands. It also offers chipsets under the AMD brand; discrete GPUs for desktop and notebook PCs under the AMD Radeon and AMD Embedded Radeon brand; professional graphic products under the AMD Radeon Pro and AMD FirePro brands; and customer-specific solutions based on AMD’s CPU, GPU, and multi-media technologies. In addition, it provides 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, G-Series, and AMD Embedded Radeon brands; consumer graphics under the AMD Radeon brand; and semi-custom SoC products. It serves original equipment and design manufacturers, datacenters, system integrators, distributors, and add-in-board manufacturers through its direct sales force, independent distributors, and sales representatives. Advanced Micro Devices, Inc. was founded in 1969 and is headquartered in Santa Clara, California.
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