Evaluating Advanced Micro Devices Against Peers In Semiconductors & Semiconductor Equipment Industry

In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Advanced Micro Devices AMD against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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.

Upon closer analysis of Advanced Micro Devices, the following trends become apparent:

• The current Price to Earnings ratio of 167.7 is 3.19x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• Considering a Price to Book ratio of 4.03, which is well below the industry average by 0.49x, the stock may be undervalued based on its book value compared to its peers.

• The Price to Sales ratio is 9.91, which is 0.99x the industry average. This suggests a possible undervaluation based on sales performance.

• The company has a lower Return on Equity (ROE) of 0.47%, which is 4.26% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.12 Billion is 0.04x below the industry average, suggesting potential lower profitability or financial challenges.

• The gross profit of $2.86 Billion is 0.13x below that of its industry, suggesting potential lower revenue after accounting for production costs.

• The company's revenue growth of 8.88% is notably higher compared to the industry average of 7.73%, showcasing exceptional sales performance and strong demand for its products or services.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.

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 terms of the Debt-to-Equity ratio, Advanced Micro Devices can be assessed by comparing it to its top 4 peers, resulting in the following observations:

• When comparing the debt-to-equity ratio, Advanced Micro Devices is in a stronger financial position compared to its top 4 peers.

• The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.04.

Key Takeaways

For Advanced Micro Devices, the PE ratio is high compared to its peers in the Semiconductors & Semiconductor Equipment industry, indicating potentially overvalued stock. The PB and PS ratios are low, suggesting a possible undervaluation relative to industry standards. On the other hand, the low ROE, EBITDA, and gross profit, along with high revenue growth, may indicate areas of improvement in operational efficiency and profitability compared to industry competitors.

This article was generated by Benzinga's automated content engine and reviewed by an editor.