It’s time to break down one of the leading semiconductor names within the market. Here is the break down of $AMD, otherwise known as Advanced Micro Devices.
Current Price: $88.63
52/Wk High: $99.23
52/Wk Low: $48.42
Market Cap: $103.5 Billion
Read below for the breakdown!
Advanced Micro Devices is a major global semiconductor company that offers various components such as APUs and CPUs.
Advanced Micro Devices operates in several core segments, the company’s Computing & Graphics segment, as well as the company’s Enterprise, Embedded, and Semi-custom segment.
Sifting through the stock price according to TREFIS (@trefis) data, 60.4% of the stock price is based on the Computing and Graphics segment while 37.9% is based on the Enterprise, Embedded and Semi-Custom segment.
Lastly, 1.7% of the stock price is based on cash.
Months ago AMD shifted to the acquisition front, acquiring Xilinx, the number one provider of adaptive computing solutions, in an all-stock $35 billion deal.
Management was upbeat.
“Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” CEO Lisa Su said.
Of recent, AMD has been mostly flat since August of last year, moving to the downside by just over 7% since the beginning of 2020 on semiconductor shortage fears and doubts about the Xilinx deal.
Digging into the numbers AMD beat Q1 2021 expectations with an EPS of $0.45, better than the analyst's EPS consensus estimate of $0.44. On a year-over-year basis, EPS improved by a strong 221%.
On the revenues front, AMD reported 93% year-over-year revenue growth, bringing Q1 2021 total revenues to $3.445 billion.
Breaking down revenues, the Computing and Graphics segment turned out $2.10 billion in revenues, representing strong 46% growth. The segment was driven by the Ryzen processor and Radeon graphics products.
Furthermore, the Enterprise, Embedded and Semi-Customs segment delivered 286% year-over-year revenue growth, bringing the segment's total revenues to $1.35 billion.
On the margins front, AMD delivered a 46% gross margin in Q1 2021, representing no improvement on a year-over-year basis but a 1% improvement on a quarter-over-quarter basis.
Shifting into profits, AMD delivered a gross product of $1.587 billion, representing a strong 94% year-over-year gross profit improvement.
As for income, AMD delivered an operating income of $662 million, representing a strong 274% improvement in operating income on a year-over-year basis.
Breaking down income the Computing and Graphics segment turned out $485 million in operating income, significantly higher than the Q1 2020 operating income level of $262 million.
Rounding out income from operations, the Enterprise, Embedded and Semi-Customs segment turned out $277 million in operating income, a strong improvement over the $26 million operating loss a year ago.
The company delivered strong net income as well, with net income totaling $555 million for Q1 2021, representing 243% growth year-over-year. For comparison, the Q1 2020 net income level was $162 million.
Rounding out the quarter, operating expenses increased by 45% to $929 million, but this is to be expected given the vast amount of growth experienced.
Management was positive on the quarter.
“Our business continued to accelerate in the first quarter driven by the best product portfolio in our history, strong execution and robust market demand,” CEO Lisa Su said.
Looking to the future, management is expecting Q2 2021 revenues to total $3.6 billion, give or take $100 million. If AMD meets guidance, revenues will have increased by 86% year-over-year.
Shifting into the balance sheet, the numbers are solid. (Q4 Levels)
Total Debt: $330 Million
Total Liabilities: $3.125 Billion
Total Assets: $8.962 Billion
Cash & Short Term Inv: $2.290 Billion
On a valuation basis AMD does trade at a premium.
Price to Earnings: 41.75x
Forward Price to Earnings: 33.71x
Price to Sales: 10.13x
Price to Book: 17.61x
Price to Cash Flow: 13.85x
Management has been effective.
Return on Equity: 57.48%
Return on Assets: 33.16%
Return on Invested Capital: 48.66%
Given the numbers the analysts are bullish with a mean price target of $103.58/share, representing a 21.56% upside.
The high price target is $135.00/share, representing 58.43% upside, while the low price target is $70.00/share, representing -17.85% downside.
The big money is quite involved as well with 75.03% of AMD being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and T. Rowe Price Associates.
On a technical basis AMD is solid. According to the six-month charts the MACD is moving with upside momentum within a range of 0.8588 down to 0.0498.
The six-month charts are also indicating an RSI of 62.5 and CCI of 231.38, both of which are on the high end.
In short, AMD ( $AMD ) is firing on all cylinders with significant growth across the company and it seems the semiconductor shortage fears were overdone. With expanding revenues, a strong management team, and plenty of market space to grow into, AMD is a solid long term bet.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.