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Advanced Micro Devices (AMD) Is Today's Perilous Reversal Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Advanced Micro Devices ( AMD) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Advanced Micro Devices as such a stock due to the following factors:

  • AMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $66.3 million.
  • AMD has traded 18.1 million shares today.
  • AMD is down 3% today.
  • AMD was up 5.9% yesterday.

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More details on AMD:

Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. It operates in two segments, Computing Solutions and Graphics and Visual Solutions. Currently there are 6 analysts that rate Advanced Micro Devices a buy, 4 analysts rate it a sell, and 8 rate it a hold.

The average volume for Advanced Micro Devices has been 22.6 million shares per day over the past 30 days. Advanced Micro Devices has a market cap of $2.7 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.22 and a short float of 20.5% with 7.18 days to cover. Shares are down 3.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Advanced Micro Devices as a sell. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 3.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AMD's quick ratio is somewhat strong at 1.19, demonstrating the ability to handle short-term liquidity needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ADVANCED MICRO DEVICES's return on equity significantly trails that of both the industry average and the S&P 500.
  • 37.95% is the gross profit margin for ADVANCED MICRO DEVICES which we consider to be strong. Regardless of AMD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMD's net profit margin of 5.60% is significantly lower than the industry average.
  • Net operating cash flow has significantly increased by 107.34% to $21.00 million when compared to the same quarter last year. In addition, ADVANCED MICRO DEVICES has also vastly surpassed the industry average cash flow growth rate of -9.58%.
  • This stock has increased by 53.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in AMD do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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