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Advanced Micro Devices (AMD) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Advanced Micro Devices (AMD) closed the most recent trading day at $42.77, moving +0.99% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.03%. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq added 0.1%.

Prior to today's trading, shares of the chipmaker had gained 6.19% over the past month. This has outpaced the Computer and Technology sector's gain of 2.71% and the S&P 500's gain of 1.82% in that time.

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 $0.30 per share, which would represent year-over-year growth of 275%. Our most recent consensus estimate is calling for quarterly revenue of $2.10 billion, up 48.09% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.62 per share and revenue of $6.71 billion, which would represent changes of +34.78% and +3.55%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for AMD. Recent revisions tend to reflect the latest near-term business trends. 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. 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 remained stagnant. AMD is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, AMD is holding a Forward P/E ratio of 68.4. This valuation marks a premium compared to its industry's average Forward P/E of 24.23.

Investors should also note that AMD has a PEG ratio of 2.83 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 2.73 as of yesterday's close.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 36, putting 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.

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


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