APPLIED MATERIALS INC (AMAT) Stock Fundamental Analysis
NASDAQ:AMAT - Nasdaq - US0382221051 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to AMAT. AMAT was compared to 110 industry peers in the Semiconductors & Semiconductor Equipment industry. AMAT gets an excellent profitability rating and is at the same time showing great financial health properties. AMAT is not valued too expensively and it also shows a decent growth rate. These ratings would make AMAT suitable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year AMAT was profitable.
AMAT had a positive operating cash flow in the past year.
AMAT had positive earnings in each of the past 5 years.
In the past 5 years AMAT always reported a positive cash flow from operatings.
1.2 Ratios
AMAT has a better Return On Assets (20.09%) than 93.64% of its industry peers.
Looking at the Return On Equity, with a value of 35.64%, AMAT belongs to the top of the industry, outperforming 92.73% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 27.88%, AMAT belongs to the top of the industry, outperforming 97.27% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for AMAT is significantly above the industry average of 10.57%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.09% | ||
| ROE | 35.64% | ||
| ROIC | 27.88% |
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
Looking at the Profit Margin, with a value of 24.06%, AMAT belongs to the top of the industry, outperforming 85.45% of the companies in the same industry.
In the last couple of years the Profit Margin of AMAT has grown nicely.
AMAT has a better Operating Margin (29.66%) than 90.00% of its industry peers.
AMAT's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 48.14%, AMAT is in line with its industry, outperforming 57.27% of the companies in the same industry.
In the last couple of years the Gross Margin of AMAT has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 29.66% | ||
| PM (TTM) | 24.06% | ||
| GM | 48.14% |
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.
Compared to 1 year ago, AMAT has an improved debt to assets ratio.
2.2 Solvency
AMAT has an Altman-Z score of 9.92. This indicates that AMAT is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 9.92, AMAT is in the better half of the industry, outperforming 80.00% of the companies in the same industry.
The Debt to FCF ratio of AMAT is 1.07, which is an excellent value as it means it would take AMAT, only 1.07 years of fcf income to pay off all of its debts.
AMAT has a better Debt to FCF ratio (1.07) than 76.36% of its industry peers.
AMAT has a Debt/Equity ratio of 0.33. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.33, AMAT is not doing good in the industry: 63.64% of the companies in the same industry are doing better.
Even though the debt/equity ratio score it not favorable for AMAT, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 1.07 | ||
| Altman-Z | 9.92 |
ROIC/WACC2.79
WACC10%
2.3 Liquidity
AMAT has a Current Ratio of 2.46. This indicates that AMAT is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of AMAT (2.46) is worse than 62.73% of its industry peers.
A Quick Ratio of 1.76 indicates that AMAT should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.76, AMAT is not doing good in the industry: 65.45% of the companies in the same industry are doing better.
The current and quick ratio evaluation for AMAT is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.46 | ||
| Quick Ratio | 1.76 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.77% over the past year.
The Earnings Per Share has been growing by 23.21% on average over the past years. This is a very strong growth
AMAT shows a small growth in Revenue. In the last year, the Revenue has grown by 5.99%.
Measured over the past years, AMAT shows a quite strong growth in Revenue. The Revenue has been growing by 13.22% on average per year.
EPS 1Y (TTM)11.77%
EPS 3Y8.08%
EPS 5Y23.21%
EPS Q2Q%14.35%
Revenue 1Y (TTM)5.99%
Revenue growth 3Y5.62%
Revenue growth 5Y13.22%
Sales Q2Q%6.83%
3.2 Future
The Earnings Per Share is expected to grow by 10.33% on average over the next years. This is quite good.
AMAT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.18% yearly.
EPS Next Y9.63%
EPS Next 2Y8.73%
EPS Next 3Y8.87%
EPS Next 5Y10.33%
Revenue Next Year6.25%
Revenue Next 2Y5.98%
Revenue Next 3Y6.33%
Revenue Next 5Y7.18%
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
A Price/Earnings ratio of 18.77 indicates a rather expensive valuation of AMAT.
79.09% of the companies in the same industry are more expensive than AMAT, based on the Price/Earnings ratio.
AMAT is valuated rather cheaply when we compare the Price/Earnings ratio to 26.34, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 16.88, the valuation of AMAT can be described as correct.
Based on the Price/Forward Earnings ratio, AMAT is valued a bit cheaper than 71.82% of the companies in the same industry.
AMAT is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.19, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.77 | ||
| Fwd PE | 16.88 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AMAT is valued a bit cheaper than 73.64% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, AMAT is valued a bit cheaper than the industry average as 77.27% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.67 | ||
| EV/EBITDA | 15.65 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates AMAT does not grow enough to justify the current Price/Earnings ratio.
AMAT has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.95
PEG (5Y)0.81
EPS Next 2Y8.73%
EPS Next 3Y8.87%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.05%, AMAT has a reasonable but not impressive dividend return.
AMAT's Dividend Yield is rather good when compared to the industry average which is at 2.50. AMAT pays more dividend than 81.82% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, AMAT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.05% |
5.2 History
The dividend of AMAT is nicely growing with an annual growth rate of 12.01%!
AMAT has paid a dividend for at least 10 years, which is 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 19.40% of its income as dividend. This is a sustainable payout ratio.
The dividend of AMAT is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP19.4%
EPS Next 2Y8.73%
EPS Next 3Y8.87%
172.84
-1.25 (-0.72%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners83.29%
Inst Owner Change-1.36%
Ins Owners0.26%
Ins Owner Change-1.11%
Market Cap138.70B
Analysts79.51
Price Target201.42 (16.54%)
Short Float %2.08%
Short Ratio2.05
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.05% |
Yearly Dividend1.44
Dividend Growth(5Y)12.01%
DP19.4%
Div Incr Years7
Div Non Decr Years19
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.7%
Min EPS beat(2)1.29%
Max EPS beat(2)2.11%
EPS beat(4)4
Avg EPS beat(4)2.49%
Min EPS beat(4)1.29%
Max EPS beat(4)3.84%
EPS beat(8)8
Avg EPS beat(8)4.2%
EPS beat(12)12
Avg EPS beat(12)5.37%
EPS beat(16)13
Avg EPS beat(16)3.89%
Revenue beat(2)0
Avg Revenue beat(2)-1.98%
Min Revenue beat(2)-2.34%
Max Revenue beat(2)-1.62%
Revenue beat(4)0
Avg Revenue beat(4)-1.27%
Min Revenue beat(4)-2.34%
Max Revenue beat(4)-0.43%
Revenue beat(8)3
Avg Revenue beat(8)-0.05%
Revenue beat(12)6
Avg Revenue beat(12)0.39%
Revenue beat(16)7
Avg Revenue beat(16)-0.16%
PT rev (1m)-2.6%
PT rev (3m)-5.23%
EPS NQ rev (1m)1.56%
EPS NQ rev (3m)1.71%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.2%
Revenue NQ rev (1m)0.3%
Revenue NQ rev (3m)0.38%
Revenue NY rev (1m)0.09%
Revenue NY rev (3m)0.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.77 | ||
| Fwd PE | 16.88 | ||
| P/S | 4.94 | ||
| P/FCF | 23.67 | ||
| P/OCF | 18.6 | ||
| P/B | 7.32 | ||
| P/tB | 9.27 | ||
| EV/EBITDA | 15.65 |
EPS(TTM)9.21
EY5.33%
EPS(NY)10.24
Fwd EY5.92%
FCF(TTM)7.3
FCFY4.23%
OCF(TTM)9.29
OCFY5.38%
SpS35
BVpS23.63
TBVpS18.65
PEG (NY)1.95
PEG (5Y)0.81
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.09% | ||
| ROE | 35.64% | ||
| ROCE | 32.5% | ||
| ROIC | 27.88% | ||
| ROICexc | 37.43% | ||
| ROICexgc | 46.97% | ||
| OM | 29.66% | ||
| PM (TTM) | 24.06% | ||
| GM | 48.14% | ||
| FCFM | 20.87% |
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-Score7
Asset Turnover0.84
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 1.07 | ||
| Debt/EBITDA | 0.72 | ||
| Cap/Depr | 386.2% | ||
| Cap/Sales | 5.68% | ||
| Interest Coverage | 37.36 | ||
| Cash Conversion | 85.26% | ||
| Profit Quality | 86.73% | ||
| Current Ratio | 2.46 | ||
| Quick Ratio | 1.76 | ||
| Altman-Z | 9.92 |
F-Score7
WACC10%
ROIC/WACC2.79
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)11.77%
EPS 3Y8.08%
EPS 5Y23.21%
EPS Q2Q%14.35%
EPS Next Y9.63%
EPS Next 2Y8.73%
EPS Next 3Y8.87%
EPS Next 5Y10.33%
Revenue 1Y (TTM)5.99%
Revenue growth 3Y5.62%
Revenue growth 5Y13.22%
Sales Q2Q%6.83%
Revenue Next Year6.25%
Revenue Next 2Y5.98%
Revenue Next 3Y6.33%
Revenue Next 5Y7.18%
EBIT growth 1Y8.89%
EBIT growth 3Y3%
EBIT growth 5Y18.52%
EBIT Next Year15.87%
EBIT Next 3Y9.95%
EBIT Next 5Y6.82%
FCF growth 1Y-0.88%
FCF growth 3Y16.18%
FCF growth 5Y21.69%
OCF growth 1Y8.25%
OCF growth 3Y16.83%
OCF growth 5Y21.72%