20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. Here's how he does it.
In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Advanced Micro Devices (NASDAQ:AMD) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Advanced Micro Devices Background
Advanced Micro Devices designs a variety of digital semiconductors for markets such as PCs, gaming consoles, data centers, industrial, and automotive applications, among others. AMD's traditional strength was in central processing units, CPUs, and graphics processing units, or GPUs, used in PCs and data centers. Additionally, the firm supplies the chips found in prominent game consoles such as the Sony PlayStation and Microsoft Xbox. In 2022, the firm acquired field-programmable gate array, or FPGA, leader Xilinx to diversify its business and augment its opportunities in key end markets such as the data center and automotive.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Advanced Micro Devices Inc | 1340.27 | 4.33 | 10.83 | 0.54% | $1.13 | $2.75 | 4.22% |
| NVIDIA Corp | 65.34 | 36.77 | 27.48 | 30.42% | $10.96 | $13.4 | 205.51% |
| Taiwan Semiconductor Manufacturing Co Ltd | 19.01 | 4.95 | 7.67 | 6.46% | $392.33 | $296.64 | -10.83% |
| Broadcom Inc | 33.85 | 21.78 | 13.31 | 15.3% | $5.3 | $6.41 | 4.09% |
| Qualcomm Inc | 22.18 | 7.46 | 4.55 | 7.05% | $2.06 | $4.75 | -24.26% |
| Texas Instruments Inc | 22.08 | 9.31 | 8.62 | 10.44% | $2.34 | $2.81 | -13.53% |
| Analog Devices Inc | 30.31 | 2.77 | 8.16 | 1.39% | $1.18 | $1.65 | -16.36% |
| ARM Holdings PLC | 428.09 | 16.14 | 27.15 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 19.78 | 7 | 5.57 | 9.66% | $1.1 | $1.53 | 8.74% |
| STMicroelectronics NV | 10.80 | 2.93 | 2.72 | 7.28% | $1.69 | $2.11 | 2.55% |
| ON Semiconductor Corp | 16.85 | 4.81 | 4.50 | 8.05% | $0.87 | $1.03 | -0.54% |
| GLOBALFOUNDRIES Inc | 23.86 | 3.11 | 4.41 | 2.34% | $0.64 | $0.53 | -10.7% |
| United Microelectronics Corp | 9.33 | 1.86 | 2.75 | 4.72% | $29.0 | $20.46 | -24.3% |
| ASE Technology Holding Co Ltd | 16.97 | 2.11 | 1.04 | 3.06% | $28.07 | $24.92 | -18.27% |
| First Solar Inc | 38.97 | 2.92 | 5.84 | 4.35% | $0.37 | $0.38 | 27.37% |
| Skyworks Solutions Inc | 18.34 | 2.96 | 3.78 | 4.09% | $0.4 | $0.48 | -13.37% |
| Lattice Semiconductor Corp | 45.39 | 15.21 | 13 | 8.96% | $0.07 | $0.13 | 11.4% |
| Universal Display Corp | 44.38 | 6.55 | 15.50 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 26.05 | 7.68 | 16.32 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 72.64 | 7.06 | 10.25 | 2.63% | $0.05 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 23.28 | 5.31 | 5.50 | 6.18% | $0.09 | $0.16 | 15.92% |
| Average | 49.38 | 8.43 | 9.41 | 7.23% | $23.83 | $18.92 | 6.87% |
By thoroughly analyzing Advanced Micro Devices, we can discern the following trends:
At 1340.27, the stock's Price to Earnings ratio significantly exceeds the industry average by 27.14x, suggesting a premium valuation relative to industry peers.
With a Price to Book ratio of 4.33, significantly falling below the industry average by 0.51x, it suggests undervaluation and the possibility of untapped growth prospects.
With a relatively high Price to Sales ratio of 10.83, which is 1.15x the industry average, the stock might be considered overvalued based on sales performance.
The company has a lower Return on Equity (ROE) of 0.54%, which is 6.69% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.13 Billion, which is 0.05x below the industry average, the company may face lower profitability or financial challenges.
Compared to its industry, the company has lower gross profit of $2.75 Billion, which indicates 0.15x below the industry average, potentially indicating lower revenue after accounting for production costs.
The company is witnessing a substantial decline in revenue growth, with a rate of 4.22% compared to the industry average of 6.87%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By considering the Debt-to-Equity ratio, Advanced Micro Devices can be compared to its top 4 peers, leading to the following observations:
When considering the debt-to-equity ratio, Advanced Micro Devices exhibits a stronger financial position compared to its top 4 peers.
This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.05, which can be perceived as a positive aspect by investors.
Key Takeaways
The high PE ratio of Advanced Micro Devices suggests that the company's stock is relatively expensive compared to its peers in the Semiconductors & Semiconductor Equipment industry. The low PB ratio indicates that the stock is undervalued in terms of its book value. The high PS ratio suggests that investors are willing to pay a premium for the company's sales.
The low ROE of Advanced Micro Devices indicates that the company is not generating significant returns on its shareholders' equity. The low EBITDA suggests that the company's operating profitability is relatively weak. The low gross profit indicates that the company's cost of goods sold is high compared to its revenue. The low revenue growth suggests that the company's sales are not growing at a significant rate.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. Here's how he does it.
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