Applied Materials Inc

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AMAT : NASDAQ : Technology
$26.29 -0.33 | -1.24%
Today's Range: 26.16 - 26.68
Avg. Daily Volume: 13,673,000
07/29/16 - 4:00 PM ET

Financial Analysis


APPLIED MATERIALS INC's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. APPLIED MATERIALS INC has strong liquidity. Currently, the Quick Ratio is 1.74 which shows the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.

During the same period, stockholders' equity ("net worth") has decreased by 21.38% from the same quarter last year. The key liquidity measurements indicate that the company is unlikely to face financial difficulties in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)2450.02442.0
EBITDA ($mil)520.0521.0
EBIT ($mil)424.0431.0
Net Income ($mil)320.0364.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)2640.03230.0
Total Assets ($mil)13075.013587.0
Total Debt ($mil)3343.01947.0
Equity ($mil)6565.08351.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin44.6145.05
EBITDA Margin21.2221.33
Operating Margin17.3117.65
Sales Turnover0.730.69
Return on Assets9.729.33
Return on Equity19.3615.19
Debt Q2 FY16 Q2 FY15
Current Ratio2.582.76
Debt/Capital0.340.19
Interest Expense37.024.0
Interest Coverage11.4617.96


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)1089.141231.6
Div / share0.10.1
EPS0.290.29
Book value / share6.036.78
Institutional Own % n/a n/a
Avg Daily Volume1.3633109E71.224193E7

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 35.97 for the Semiconductors & Semiconductor Equipment industry and a value on par with the S&P 500 average of 25.05. Conducting a second comparison, its price-to-book ratio of 4.35 indicates a significant premium versus the S&P 500 average of 2.81 and a premium versus the industry average of 4.20. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. The valuation analysis reveals that, APPLIED MATERIALS INC seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AMAT 24.06 Peers 35.97   AMAT 19.52 Peers 26.17

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

AMAT is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

AMAT is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
AMAT 14.10 Peers 18.96   AMAT 0.63 Peers 2.94

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

AMAT is trading at a discount to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

AMAT trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AMAT 4.35 Peers 4.20   AMAT 6.86 Peers -6.14

Average. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

AMAT is trading at a valuation on par with its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

AMAT is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AMAT 2.99 Peers 4.88   AMAT 2.51 Peers 4.47

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

AMAT is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

AMAT significantly trails its peers on the basis of sales growth

 

 

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