In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating Advanced Micro Devices 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 | 308.30 | 4.72 | 11.71 | 1.2% | $1.22 | $2.91 | 10.16% |
| NVIDIA Corp | 73.27 | 50.85 | 35.79 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 49.38 | 8.76 | 14.92 | 2.81% | $4.61 | $7.38 | 34.17% |
| Qualcomm Inc | 24.04 | 8.16 | 5.22 | 12.4% | $3.58 | $5.62 | 4.99% |
| Intel Corp | 90.58 | 1.46 | 2.81 | 2.57% | $5.57 | $7.05 | 9.71% |
| Texas Instruments Inc | 23.70 | 9.03 | 8.76 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1478.25 | 25.11 | 42.77 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 34.15 | 2.67 | 8.31 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 20.08 | 6.56 | 5.54 | 5.97% | $0.75 | $1.12 | -18.6% |
| STMicroelectronics NV | 9.04 | 2.17 | 2.20 | 6.69% | $1.5 | $1.95 | -3.21% |
| Monolithic Power Systems Inc | 74.78 | 15.55 | 17.54 | 4.85% | $0.12 | $0.25 | -1.3% |
| ON Semiconductor Corp | 13.23 | 3.57 | 3.50 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 26.12 | 2.38 | 3.60 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 21.58 | 2.55 | 1.30 | 4.45% | $29.8 | $25.76 | -9.49% |
| United Microelectronics Corp | 10.24 | 1.72 | 2.80 | 3.72% | $25.78 | $17.81 | -3.7% |
| First Solar Inc | 22.35 | 2.77 | 5.60 | 5.38% | $0.47 | $0.5 | 15.58% |
| Skyworks Solutions Inc | 17.55 | 2.55 | 3.42 | 3.76% | $0.37 | $0.51 | -9.61% |
| Lattice Semiconductor Corp | 40.57 | 14.92 | 14.23 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 36.31 | 5.04 | 12.72 | 4.36% | $0.08 | $0.12 | -6.34% |
| MACOM Technology Solutions Holdings Inc | 96.01 | 7.03 | 11.45 | 1.27% | $0.03 | $0.09 | -12.75% |
| Rambus Inc | 19.50 | 6.14 | 14.11 | 5.87% | $0.07 | $0.1 | -0.12% |
| Average | 109.04 | 8.95 | 10.83 | 6.62% | $4.61 | $4.57 | 11.8% |
Through an analysis of Advanced Micro Devices, we can infer the following trends:
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The Price to Earnings ratio of 308.3 for this company is 2.83x above the industry average, indicating a premium valuation associated with the stock.
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The current Price to Book ratio of 4.72, which is 0.53x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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With a relatively high Price to Sales ratio of 11.71, which is 1.08x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 1.2% that is 5.42% below the industry average, it appears that the company exhibits 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 $1.22 Billion, which is 0.26x below the industry average. This potentially indicates lower profitability or financial challenges.
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With lower gross profit of $2.91 Billion, which indicates 0.64x below the industry average, the company may experience lower revenue after accounting for production costs.
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The company's revenue growth of 10.16% is significantly lower compared to the industry average of 11.8%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.
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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When considering the debt-to-equity ratio, Advanced Micro Devices exhibits a stronger financial position compared to its top 4 peers.
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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 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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