Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Advanced Micro Devices AMD in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 374.32 | 5.74 | 14.21 | 1.2% | $1.22 | $2.91 | 10.16% |
| NVIDIA Corp | 71.91 | 49.90 | 35.12 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 48.07 | 8.53 | 14.53 | 2.81% | $4.61 | $7.38 | 28.68% |
| Qualcomm Inc | 24.41 | 8.28 | 5.30 | 12.4% | $3.58 | $5.62 | 4.99% |
| Intel Corp | 112.15 | 1.80 | 3.48 | 2.57% | $5.57 | $7.05 | 9.71% |
| Texas Instruments Inc | 24.64 | 9.37 | 9.11 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1532.92 | 26.04 | 44.35 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 35.40 | 2.77 | 8.62 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 21.16 | 6.91 | 5.83 | 5.97% | $0.75 | $1.12 | -18.6% |
| Monolithic Power Systems Inc | 82.11 | 17.07 | 19.26 | 4.85% | $0.12 | $0.25 | -1.3% |
| ON Semiconductor Corp | 16.69 | 4.48 | 4.42 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 29.21 | 2.66 | 4.02 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 24.08 | 2.50 | 1.29 | 3.17% | $28.28 | $25.76 | 4.16% |
| United Microelectronics Corp | 9.24 | 1.84 | 2.72 | 4.72% | $29.0 | $20.46 | -24.3% |
| First Solar Inc | 20.96 | 2.59 | 5.25 | 5.38% | $0.47 | $0.5 | 15.58% |
| Skyworks Solutions Inc | 19.09 | 2.77 | 3.72 | 3.76% | $0.37 | $0.51 | -9.61% |
| Lattice Semiconductor Corp | 43.30 | 15.92 | 15.19 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 39.76 | 5.52 | 13.93 | 4.36% | $0.08 | $0.12 | -6.34% |
| Rambus Inc | 20.77 | 6.54 | 15.03 | 5.87% | $0.07 | $0.1 | -0.12% |
| MACOM Technology Solutions Holdings Inc | 89.36 | 6.54 | 10.66 | 1.27% | $0.03 | $0.09 | -12.75% |
| Allegro Microsystems Inc | 27.16 | 5.27 | 5.60 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 114.62 | 9.36 | 11.37 | 6.42% | $4.62 | $4.61 | 11.46% |
Upon analyzing Advanced Micro Devices, the following trends can be observed:
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The Price to Earnings ratio of 374.32 for this company is 3.27x above the industry average, indicating a premium valuation associated with the stock.
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Considering a Price to Book ratio of 5.74, which is well below the industry average by 0.61x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio of 14.21, which is 1.25x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a lower Return on Equity (ROE) of 1.2%, which is 5.22% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.22 Billion, which is 0.26x below the industry average, the company may face lower profitability or financial challenges.
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With lower gross profit of $2.91 Billion, which indicates 0.63x below the industry average, the company may experience lower revenue after accounting for production costs.
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The company is witnessing a substantial decline in revenue growth, with a rate of 10.16% compared to the industry average of 11.46%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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 evaluating Advanced Micro Devices against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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Among its top 4 peers, Advanced Micro Devices has a stronger financial position with a lower debt-to-equity ratio of 0.05.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
The high PE ratio of Advanced Micro Devices indicates that investors are willing to pay a premium for its earnings compared to its peers in the Semiconductors & Semiconductor Equipment industry. The low PB ratio suggests that the market values the company's assets at a lower price relative to its stock price. With a high PS ratio, Advanced Micro Devices is generating more revenue per dollar of market cap compared to industry peers. On the other hand, the low ROE, EBITDA, gross profit, and revenue growth indicate that the company may be less efficient in generating profits and growth compared to its industry counterparts.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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