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

Zacks Equity Research
Vanda (VNDA) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

Advanced Micro Devices (AMD) closed at $25.30 in the latest trading session, marking a +1.2% move from the prior day. This change outpaced the S&P 500's 2.06% loss on the day. Meanwhile, the Dow lost 2.13%, and the Nasdaq, a tech-heavy index, lost 1.25%.

Prior to today's trading, shares of the chipmaker had lost 22.38% over the past month. This has lagged the Computer and Technology sector's loss of 6.61% and the S&P 500's loss of 3.01% in that time.

Wall Street will be looking for positivity from AMD as it approaches its next earnings report date. This is expected to be October 23, 2018. The company is expected to report EPS of $0.13, up 30% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.71 billion, up 3.92% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.48 per share and revenue of $6.72 billion, which would represent changes of +182.35% and +26.13%, 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 a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 4.31% higher. AMD is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that AMD has a Forward P/E ratio of 51.72 right now. This valuation marks a premium compared to its industry's average Forward P/E of 16.36.

Meanwhile, AMD's PEG ratio is currently 3.69. 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 was holding an average PEG ratio of 1.23 at yesterday's closing price.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 103, putting it in the top 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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