In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Advanced Micro Devices AMD and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 | 1089.27 | 3.52 | 8.80 | 0.54% | $1.13 | $2.75 | 4.22% |
| NVIDIA Corp | 119.54 | 44.45 | 37.73 | 23.79% | $7.41 | $9.46 | 101.48% |
| Taiwan Semiconductor Manufacturing Co Ltd | 18.66 | 4.86 | 7.53 | 6.46% | $392.33 | $296.64 | -10.83% |
| Broadcom Inc | 29.52 | 17.93 | 11.31 | 14.98% | $4.91 | $6.16 | 4.87% |
| Qualcomm Inc | 19.73 | 6.63 | 4.04 | 7.05% | $2.06 | $4.75 | -24.26% |
| Texas Instruments Inc | 19.67 | 8.29 | 7.68 | 10.44% | $2.34 | $2.81 | -13.53% |
| Analog Devices Inc | 24.47 | 2.50 | 7.14 | 2.44% | $1.53 | $1.96 | -1.07% |
| ARM Holdings PLC | 308.82 | 11.65 | 19.59 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 18.02 | 6.38 | 5.07 | 9.66% | $1.1 | $1.53 | 8.74% |
| STMicroelectronics NV | 9.78 | 2.65 | 2.46 | 7.28% | $1.69 | $2.11 | 2.55% |
| GLOBALFOUNDRIES Inc | 22.21 | 2.89 | 4.10 | 2.34% | $0.64 | $0.53 | -10.7% |
| ON Semiconductor Corp | 14 | 4 | 3.74 | 8.05% | $0.87 | $1.03 | -0.54% |
| United Microelectronics Corp | 8.69 | 1.73 | 2.56 | 4.72% | $29.0 | $20.46 | -24.3% |
| ASE Technology Holding Co Ltd | 15.90 | 1.97 | 0.97 | 3.06% | $28.07 | $24.92 | -18.27% |
| First Solar Inc | 34.96 | 2.62 | 5.23 | 4.35% | $0.37 | $0.38 | 27.37% |
| Skyworks Solutions Inc | 15.24 | 2.45 | 3.14 | 4.09% | $0.4 | $0.48 | 13.78% |
| Lattice Semiconductor Corp | 38.74 | 12.98 | 11.10 | 8.96% | $0.06 | $0.13 | 1.1% |
| Universal Display Corp | 37.70 | 5.57 | 13.17 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 24.95 | 7.36 | 15.63 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 63.34 | 6.09 | 8.94 | 2.63% | $0.05 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 21.83 | 4.98 | 5.16 | 6.18% | $0.09 | $0.16 | 15.92% |
| Average | 43.29 | 7.9 | 8.81 | 6.93% | $23.65 | $18.73 | 3.32% |
By conducting a comprehensive analysis of Advanced Micro Devices, the following trends become evident:
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The current Price to Earnings ratio of 1089.27 is 25.16x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
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Considering a Price to Book ratio of 3.52, which is well below the industry average by 0.45x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio is 8.8, which is 1.0x the industry average. This suggests a possible undervaluation based on sales performance.
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The Return on Equity (ROE) of 0.54% is 6.39% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.13 Billion, which is 0.05x below the industry average. This potentially indicates lower profitability or financial challenges.
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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.
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With a revenue growth of 4.22%, which surpasses the industry average of 3.32%, 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.
In light of the Debt-to-Equity ratio, a comparison between Advanced Micro Devices and its top 4 peers reveals the following information:
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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
Advanced Micro Devices (AMD) has a high PE ratio compared to its peers in the Semiconductors & Semiconductor Equipment industry, indicating that the stock may be overvalued. The company's low PB and PS ratios suggest that it may be undervalued in terms of its book value and sales.
In terms of profitability, AMD has a low ROE, indicating that it is not generating significant returns on shareholders' equity. The company also has low EBITDA and gross profit margins, suggesting potential challenges in generating profits from its operations.
However, AMD shows strong revenue growth compared to its industry peers, indicating potential opportunities for future expansion. Overall, while the company's valuation ratios suggest mixed signals, its revenue growth stands out as a positive factor for industry sector analysis.
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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