In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Advanced Micro Devices AMD alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer 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 | 332.09 | 5.09 | 12.61 | 1.2% | $1.22 | $2.91 | 10.16% |
| NVIDIA Corp | 66.30 | 46.01 | 32.38 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 39.69 | 25.55 | 15.61 | 15.3% | $5.3 | $6.41 | 4.09% |
| Intel Corp | 107.47 | 1.72 | 3.34 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 22.40 | 7.60 | 4.87 | 12.4% | $3.58 | $5.62 | 4.99% |
| ARM Holdings PLC | 1768.28 | 30.04 | 51.16 | 1.78% | $0.18 | $0.79 | 13.81% |
| Texas Instruments Inc | 23.24 | 8.84 | 8.59 | 8.14% | $1.98 | $2.43 | -12.7% |
| Analog Devices Inc | 33.75 | 2.64 | 8.22 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 19.37 | 6.33 | 5.34 | 9.66% | $0.75 | $1.12 | 8.74% |
| STMicroelectronics NV | 10.06 | 2.42 | 2.45 | 6.69% | $1.5 | $1.95 | -3.21% |
| ON Semiconductor Corp | 15.86 | 4.26 | 4.20 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 29.79 | 2.72 | 4.10 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 21.73 | 2.26 | 1.17 | 3.06% | $28.07 | $24.92 | -18.27% |
| United Microelectronics Corp | 8.66 | 1.72 | 2.55 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 18.39 | 2.67 | 3.58 | 3.76% | $0.37 | $0.51 | -9.61% |
| First Solar Inc | 32.71 | 2.45 | 4.90 | 4.35% | $0.37 | $0.38 | 27.37% |
| Lattice Semiconductor Corp | 40.59 | 14.93 | 14.24 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 40.83 | 5.67 | 14.30 | 4.36% | $0.08 | $0.12 | -6.34% |
| Rambus Inc | 19.48 | 6.09 | 14.10 | 5.87% | $0.07 | $0.1 | -0.12% |
| MACOM Technology Solutions Holdings Inc | 84.36 | 6.17 | 10.06 | 2.63% | $0.03 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 27.82 | 5.40 | 5.74 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 121.54 | 9.27 | 10.54 | 7.33% | $4.71 | $4.6 | 10.83% |
By carefully studying Advanced Micro Devices, we can deduce the following trends:
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The Price to Earnings ratio of 332.09 for this company is 2.73x above the industry average, indicating a premium valuation associated with the stock.
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With a Price to Book ratio of 5.09, significantly falling below the industry average by 0.55x, it suggests undervaluation and the possibility of untapped growth prospects.
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The Price to Sales ratio of 12.61, which is 1.2x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 1.2% that is 6.13% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.22 Billion, which is 0.26x below the industry average, potentially indicating 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 10.83%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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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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 and PS ratios of Advanced Micro Devices suggest that the company is relatively overvalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. In contrast, the low PB ratio indicates a potential undervaluation. The low ROE, EBITDA, gross profit, and revenue growth further highlight potential weaknesses in the company's financial performance compared to industry competitors.
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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