In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Advanced Micro Devices AMD alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 | 324.36 | 4.97 | 12.32 | 1.2% | $1.22 | $2.91 | 10.16% |
| NVIDIA Corp | 95.37 | 53.68 | 40.11 | 30.42% | $10.96 | $13.4 | 205.51% |
| Broadcom Inc | 38.38 | 24.70 | 15.09 | 15.3% | $5.3 | $6.41 | 4.09% |
| Intel Corp | 110.08 | 1.76 | 3.42 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 21.84 | 7.41 | 4.75 | 12.4% | $3.58 | $5.62 | 4.99% |
| ARM Holdings PLC | 1801.67 | 30.60 | 52.12 | 1.78% | $0.18 | $0.79 | 13.81% |
| Texas Instruments Inc | 22.79 | 8.67 | 8.42 | 8.14% | $1.98 | $2.43 | -12.7% |
| Analog Devices Inc | 29.63 | 2.71 | 7.98 | 1.39% | $1.18 | $1.65 | -16.36% |
| Microchip Technology Inc | 19.60 | 6.40 | 5.41 | 9.66% | $0.75 | $1.12 | 8.74% |
| STMicroelectronics NV | 10.28 | 2.47 | 2.50 | 6.69% | $1.43 | $1.95 | -3.36% |
| ON Semiconductor Corp | 16.55 | 4.44 | 4.38 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 21.98 | 2.86 | 4.06 | 2.34% | $0.64 | $0.53 | -10.7% |
| ASE Technology Holding Co Ltd | 20.95 | 2.18 | 1.12 | 3.06% | $28.07 | $24.92 | -18.27% |
| United Microelectronics Corp | 9.09 | 1.81 | 2.68 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 18.82 | 2.73 | 3.67 | 3.76% | $0.37 | $0.51 | -9.61% |
| First Solar Inc | 35.57 | 2.67 | 5.33 | 4.35% | $0.37 | $0.38 | 27.37% |
| Lattice Semiconductor Corp | 37.97 | 14.01 | 13.32 | 8.96% | $0.07 | $0.13 | 11.4% |
| Universal Display Corp | 42.32 | 6.25 | 14.78 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 19.27 | 6.01 | 13.95 | 5.87% | $0.06 | $0.1 | 16.08% |
| MACOM Technology Solutions Holdings Inc | 81.82 | 5.99 | 9.76 | 2.63% | $0.03 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 27.75 | 5.39 | 5.72 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 124.09 | 9.64 | 10.93 | 6.91% | $4.52 | $4.44 | 8.86% |
After thoroughly examining Advanced Micro Devices, the following trends can be inferred:
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At 324.36, the stock's Price to Earnings ratio significantly exceeds the industry average by 2.61x, suggesting a premium valuation relative to industry peers.
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Considering a Price to Book ratio of 4.97, which is well below the industry average by 0.52x, the stock may be undervalued based on its book value compared to its peers.
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The stock's relatively high Price to Sales ratio of 12.32, surpassing the industry average by 1.13x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 1.2% that is 5.71% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.22 Billion is 0.27x below the industry average, suggesting potential lower profitability or financial challenges.
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With lower gross profit of $2.91 Billion, which indicates 0.66x below the industry average, the company may experience lower revenue after accounting for production costs.
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With a revenue growth of 10.16%, which surpasses the industry average of 8.86%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile 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.
When examining Advanced Micro Devices in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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In terms of the debt-to-equity ratio, Advanced Micro Devices has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.05.
Key Takeaways
The high PE ratio suggests that Advanced Micro Devices may be overvalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. The low PB ratio indicates that the company's stock price is relatively low compared to its book value. The high PS ratio suggests that investors are willing to pay a premium for the company's revenue. The low ROE, EBITDA, gross profit, and revenue growth indicate that Advanced Micro Devices may be underperforming compared to its industry peers.
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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