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

Zacks Equity Research
·3 min read

Advanced Micro Devices (AMD) closed at $92.77 in the latest trading session, marking a +0.51% move from the prior day. This move lagged the S&P 500's daily gain of 0.71%. At the same time, the Dow added 0.56%, and the tech-heavy Nasdaq gained 0.95%.

Prior to today's trading, shares of the chipmaker had lost 1.88% over the past month. This has lagged the Computer and Technology sector's gain of 0.85% and the S&P 500's gain of 0.17% 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 $0.46 per share, which would represent year-over-year growth of 43.75%. Our most recent consensus estimate is calling for quarterly revenue of $3 billion, up 41.27% from the year-ago period.

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 such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Over the past month, the Zacks Consensus EPS estimate has moved 1.86% higher. AMD is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that AMD has a Forward P/E ratio of 51.04 right now. This valuation marks a premium compared to its industry's average Forward P/E of 22.42.

It is also worth noting that AMD currently has a PEG ratio of 1.03. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Electronics - Semiconductors was holding an average PEG ratio of 1.42 at yesterday's closing price.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 94, which puts it in the top 37% 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.

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


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