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Advanced Micro Devices (AMD) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3-min read

Advanced Micro Devices (AMD) closed at $57.44 in the latest trading session, marking a +1.86% move from the prior day. This move outpaced the S&P 500's daily loss of 0.53%. Elsewhere, the Dow lost 1.04%, while the tech-heavy Nasdaq added 0.67%.

Wall Street will be looking for positivity from AMD as it approaches its next earnings report date. On that day, AMD is projected to report earnings of $0.16 per share, which would represent year-over-year growth of 100%. Meanwhile, our latest consensus estimate is calling for revenue of $1.85 billion, up 21% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.01 per share and revenue of $8.39 billion, which would represent changes of +57.81% and +24.69%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for AMD. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. AMD is currently sporting a Zacks Rank of #4 (Sell).

Digging into valuation, AMD currently has a Forward P/E ratio of 55.73. Its industry sports an average Forward P/E of 22.93, so we one might conclude that AMD is trading at a premium comparatively.

It is also worth noting that AMD currently has a PEG ratio of 1.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Electronics - Semiconductors industry currently had an average PEG ratio of 1.73 as of yesterday's close.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 38, which puts it in the top 15% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AMD in the coming trading sessions, be sure to utilize Zacks.com.


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