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Advanced Micro Devices (AMD) Gains But Lags Market: What You Should Know

Zacks Equity Research

Advanced Micro Devices (AMD) closed at $20.75 in the latest trading session, marking a +0.88% move from the prior day. This change lagged the S&P 500's 0.97% gain on the day. Elsewhere, the Dow gained 1.09%, while the tech-heavy Nasdaq added 1.08%.

Coming into today, shares of the chipmaker had gained 2.9% in the past month. In that same time, the Computer and Technology sector lost 2.56%, while the S&P 500 lost 3.04%.

AMD will be looking to display strength as it nears its next earnings release, which is expected to be January 29, 2019. On that day, AMD is projected to report earnings of $0.09 per share, which would represent year-over-year growth of 12.5%. Meanwhile, our latest consensus estimate is calling for revenue of $1.44 billion, down 2.68% from the prior-year quarter.

Investors might also notice 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 5.39% lower. AMD is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, AMD is currently trading at a Forward P/E ratio of 32.87. This represents a premium compared to its industry's average Forward P/E of 12.72.

Investors should also note that AMD has a PEG ratio of 2.35 right now. 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. AMD's industry had an average PEG ratio of 1 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 78, which puts it in the top 31% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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