APPLIED MATERIALS INC (AMAT) Stock Fundamental Analysis
NASDAQ:AMAT - Nasdaq - US0382221051 - Common Stock - Currency: USD
AMAT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 108 industry peers in the Semiconductors & Semiconductor Equipment industry. AMAT scores excellent on profitability, but there are some minor concerns on its financial health. AMAT has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year AMAT was profitable.
AMAT had a positive operating cash flow in the past year.
In the past 5 years AMAT has always been profitable.
Each year in the past 5 years AMAT had a positive operating cash flow.
1.2 Ratios
With an excellent Return On Assets value of 20.86%, AMAT belongs to the best of the industry, outperforming 94.44% of the companies in the same industry.
AMAT has a Return On Equity of 37.77%. This is amongst the best in the industry. AMAT outperforms 92.59% of its industry peers.
With an excellent Return On Invested Capital value of 26.02%, AMAT belongs to the best of the industry, outperforming 96.30% of the companies in the same industry.
AMAT had an Average Return On Invested Capital over the past 3 years of 30.16%. This is significantly above the industry average of 11.67%.
The last Return On Invested Capital (26.02%) for AMAT is well below the 3 year average (30.16%), which needs to be investigated, but indicates that AMAT had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.86% | ||
| ROE | 37.77% | ||
| ROIC | 26.02% |
ROA(3y)22.53%
ROA(5y)21.31%
ROE(3y)44.41%
ROE(5y)43.1%
ROIC(3y)30.16%
ROIC(5y)28.95%
1.3 Margins
AMAT's Profit Margin of 26.41% is amongst the best of the industry. AMAT outperforms 87.04% of its industry peers.
In the last couple of years the Profit Margin of AMAT has grown nicely.
AMAT has a Operating Margin of 28.95%. This is amongst the best in the industry. AMAT outperforms 89.81% of its industry peers.
AMAT's Operating Margin has improved in the last couple of years.
AMAT has a Gross Margin (47.46%) which is in line with its industry peers.
In the last couple of years the Gross Margin of AMAT has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 28.95% | ||
| PM (TTM) | 26.41% | ||
| GM | 47.46% |
OM growth 3Y-2.49%
OM growth 5Y4.68%
PM growth 3Y1.14%
PM growth 5Y7.35%
GM growth 3Y0.09%
GM growth 5Y1.66%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), AMAT is creating value.
Compared to 1 year ago, AMAT has less shares outstanding
The number of shares outstanding for AMAT has been reduced compared to 5 years ago.
AMAT has a better debt/assets ratio than last year.
2.2 Solvency
The Debt to FCF ratio of AMAT is 0.84, which is an excellent value as it means it would take AMAT, only 0.84 years of fcf income to pay off all of its debts.
AMAT's Debt to FCF ratio of 0.84 is fine compared to the rest of the industry. AMAT outperforms 78.70% of its industry peers.
A Debt/Equity ratio of 0.33 indicates that AMAT is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.33, AMAT is doing worse than 63.89% of the companies in the same industry.
Although AMAT does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 0.84 | ||
| Altman-Z | N/A |
ROIC/WACC2.2
WACC11.81%
2.3 Liquidity
AMAT has a Current Ratio of 2.51. This indicates that AMAT is financially healthy and has no problem in meeting its short term obligations.
AMAT has a Current ratio (2.51) which is comparable to the rest of the industry.
A Quick Ratio of 1.87 indicates that AMAT should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.87, AMAT is in line with its industry, outperforming 43.52% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.51 | ||
| Quick Ratio | 1.87 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 9.33% over the past year.
Measured over the past years, AMAT shows a very strong growth in Earnings Per Share. The EPS has been growing by 23.21% on average per year.
The Revenue has been growing slightly by 4.34% in the past year.
The Revenue has been growing by 13.22% on average over the past years. This is quite good.
EPS 1Y (TTM)9.33%
EPS 3Y8.08%
EPS 5Y23.21%
EPS Q2Q%11.74%
Revenue 1Y (TTM)4.34%
Revenue growth 3Y5.62%
Revenue growth 5Y13.22%
Sales Q2Q%6.84%
3.2 Future
The Earnings Per Share is expected to grow by 11.44% on average over the next years. This is quite good.
AMAT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.06% yearly.
EPS Next Y9.86%
EPS Next 2Y9.36%
EPS Next 3Y7.83%
EPS Next 5Y11.44%
Revenue Next Year6.52%
Revenue Next 2Y6.56%
Revenue Next 3Y6.54%
Revenue Next 5Y8.06%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 19.30, which indicates a rather expensive current valuation of AMAT.
AMAT's Price/Earnings ratio is a bit cheaper when compared to the industry. AMAT is cheaper than 79.63% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 29.63. AMAT is valued slightly cheaper when compared to this.
A Price/Forward Earnings ratio of 16.60 indicates a correct valuation of AMAT.
Based on the Price/Forward Earnings ratio, AMAT is valued cheaper than 85.19% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of AMAT to the average of the S&P500 Index (22.68), we can say AMAT is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.3 | ||
| Fwd PE | 16.6 |
4.2 Price Multiples
AMAT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. AMAT is cheaper than 75.00% of the companies in the same industry.
89.81% of the companies in the same industry are more expensive than AMAT, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.67 | ||
| EV/EBITDA | 16.66 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of AMAT may justify a higher PE ratio.
PEG (NY)1.96
PEG (5Y)0.83
EPS Next 2Y9.36%
EPS Next 3Y7.83%
5. Dividend
5.1 Amount
With a yearly dividend of 0.91%, AMAT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.34, AMAT pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.29, AMAT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.91% |
5.2 History
On average, the dividend of AMAT grows each year by 12.01%, which is quite nice.
AMAT has been paying a dividend for at least 10 years, so it has a reliable track record.
AMAT has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)12.01%
Div Incr Years7
Div Non Decr Years19
5.3 Sustainability
AMAT pays out 16.61% of its income as dividend. This is a sustainable payout ratio.
AMAT's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP16.61%
EPS Next 2Y9.36%
EPS Next 3Y7.83%
171.98
-4.03 (-2.29%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners84.43%
Inst Owner Change-1.23%
Ins Owners0.23%
Ins Owner Change2.81%
Market Cap139.77B
Analysts79.05
Price Target212.58 (23.61%)
Short Float %2.48%
Short Ratio3.05
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.91% |
Yearly Dividend1.44
Dividend Growth(5Y)12.01%
DP16.61%
Div Incr Years7
Div Non Decr Years19
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.27%
Min EPS beat(2)2.71%
Max EPS beat(2)3.84%
EPS beat(4)4
Avg EPS beat(4)4.79%
Min EPS beat(4)2.71%
Max EPS beat(4)9.58%
EPS beat(8)8
Avg EPS beat(8)4.97%
EPS beat(12)10
Avg EPS beat(12)4.7%
EPS beat(16)13
Avg EPS beat(16)4.46%
Revenue beat(2)0
Avg Revenue beat(2)-0.55%
Min Revenue beat(2)-0.68%
Max Revenue beat(2)-0.43%
Revenue beat(4)1
Avg Revenue beat(4)0.03%
Min Revenue beat(4)-0.68%
Max Revenue beat(4)1.53%
Revenue beat(8)4
Avg Revenue beat(8)0.53%
Revenue beat(12)6
Avg Revenue beat(12)0.37%
Revenue beat(16)9
Avg Revenue beat(16)0.27%
PT rev (1m)-2.05%
PT rev (3m)-8.5%
EPS NQ rev (1m)-0.63%
EPS NQ rev (3m)1.88%
EPS NY rev (1m)-1.57%
EPS NY rev (3m)-3.71%
Revenue NQ rev (1m)-0.44%
Revenue NQ rev (3m)-0.87%
Revenue NY rev (1m)-0.63%
Revenue NY rev (3m)-3.18%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.3 | ||
| Fwd PE | 16.6 | ||
| P/S | 5.14 | ||
| P/FCF | 18.67 | ||
| P/OCF | 16.11 | ||
| P/B | 7.36 | ||
| P/tB | 9.31 | ||
| EV/EBITDA | 16.66 |
EPS(TTM)8.91
EY5.18%
EPS(NY)10.36
Fwd EY6.02%
FCF(TTM)9.21
FCFY5.36%
OCF(TTM)10.68
OCFY6.21%
SpS33.44
BVpS23.38
TBVpS18.48
PEG (NY)1.96
PEG (5Y)0.83
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.86% | ||
| ROE | 37.77% | ||
| ROCE | 30.33% | ||
| ROIC | 26.02% | ||
| ROICexc | 40.29% | ||
| ROICexgc | 52.36% | ||
| OM | 28.95% | ||
| PM (TTM) | 26.41% | ||
| GM | 47.46% | ||
| FCFM | 27.55% |
ROA(3y)22.53%
ROA(5y)21.31%
ROE(3y)44.41%
ROE(5y)43.1%
ROIC(3y)30.16%
ROIC(5y)28.95%
ROICexc(3y)39.77%
ROICexc(5y)39.3%
ROICexgc(3y)51.88%
ROICexgc(5y)52.37%
ROCE(3y)34.44%
ROCE(5y)32.94%
ROICexcg growth 3Y-7.9%
ROICexcg growth 5Y3.47%
ROICexc growth 3Y-6.23%
ROICexc growth 5Y6.64%
OM growth 3Y-2.49%
OM growth 5Y4.68%
PM growth 3Y1.14%
PM growth 5Y7.35%
GM growth 3Y0.09%
GM growth 5Y1.66%
F-Score6
Asset Turnover0.79
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 0.84 | ||
| Debt/EBITDA | 0.76 | ||
| Cap/Depr | 303.57% | ||
| Cap/Sales | 4.38% | ||
| Interest Coverage | 38.38 | ||
| Cash Conversion | 105.06% | ||
| Profit Quality | 104.32% | ||
| Current Ratio | 2.51 | ||
| Quick Ratio | 1.87 | ||
| Altman-Z | N/A |
F-Score6
WACC11.81%
ROIC/WACC2.2
Cap/Depr(3y)231.86%
Cap/Depr(5y)195.47%
Cap/Sales(3y)3.87%
Cap/Sales(5y)3.39%
Profit Quality(3y)95.26%
Profit Quality(5y)92.06%
High Growth Momentum
Growth
EPS 1Y (TTM)9.33%
EPS 3Y8.08%
EPS 5Y23.21%
EPS Q2Q%11.74%
EPS Next Y9.86%
EPS Next 2Y9.36%
EPS Next 3Y7.83%
EPS Next 5Y11.44%
Revenue 1Y (TTM)4.34%
Revenue growth 3Y5.62%
Revenue growth 5Y13.22%
Sales Q2Q%6.84%
Revenue Next Year6.52%
Revenue Next 2Y6.56%
Revenue Next 3Y6.54%
Revenue Next 5Y8.06%
EBIT growth 1Y2.78%
EBIT growth 3Y3%
EBIT growth 5Y18.52%
EBIT Next Year15.81%
EBIT Next 3Y10.63%
EBIT Next 5YN/A
FCF growth 1Y-1.41%
FCF growth 3Y16.18%
FCF growth 5Y21.69%
OCF growth 1Y-0.26%
OCF growth 3Y16.83%
OCF growth 5Y21.72%