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Measuring Applied Materials, Inc.'s (NASDAQ:AMAT) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess AMAT's recent performance announced on 28 April 2019 and compare these figures to its historical trend and industry movements.
How Well Did AMAT Perform?
AMAT's trailing twelve-month earnings (from 28 April 2019) of US$3.5b has increased by 10.0% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 29%, indicating the rate at which AMAT is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Applied Materials has invested its equity funds well leading to a 42% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the US Semiconductor industry of 8.0%, indicating Applied Materials has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Applied Materials’s debt level, has increased over the past 3 years from 16% to 26%.
What does this mean?
Though Applied Materials's past data is helpful, it is only one aspect of my investment thesis. While Applied Materials has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Applied Materials to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AMAT’s future growth? Take a look at our free research report of analyst consensus for AMAT’s outlook.
- Financial Health: Are AMAT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 April 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.