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Advanced Micro Devices (AMD) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Advanced Micro Devices (AMD) closed at $33.85 in the latest trading session, marking a -1.57% move from the prior day. This change lagged the S&P 500's 0.34% loss on the day. Meanwhile, the Dow lost 0.09%, and the Nasdaq, a tech-heavy index, lost 0.43%.

Heading into today, shares of the chipmaker had gained 17.77% over the past month, outpacing the Computer and Technology sector's gain of 6.28% and the S&P 500's gain of 4.46% in that time.

Investors will be hoping for strength from AMD as it approaches its next earnings release. On that day, AMD is projected to report earnings of $0.08 per share, which would represent a year-over-year decline of 42.86%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.52 billion, down 13.36% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.67 per share and revenue of $6.89 billion, which would represent changes of +45.65% and +6.44%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for AMD. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 has moved 0.78% higher. AMD currently has a Zacks Rank of #3 (Hold).

Investors should also note AMD's current valuation metrics, including its Forward P/E ratio of 51.68. This valuation marks a premium compared to its industry's average Forward P/E of 17.88.

Also, we should mention that AMD has a PEG ratio of 1.68. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Electronics - Semiconductors stocks are, on average, holding a PEG ratio of 1.68 based on yesterday's closing prices.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 68, which puts it in the top 27% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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