Why Advanced Micro Devices (AMD) Was Up Today

NEW YORK (TheStreet) -- Shares of Advanced Micro Devices  (AMD) were up Wednesday on the news that it was forming partnerships with three industry recognized game developers. Rebellion Developments, Square Enix and Xavient have all agreed to partner with Advanced Micro Devices to optimize their games on the PC platform.

"AMD is proud to play an instrumental role in enabling quality PC gaming experiences," said Ritche Corpus, director of ISV gaming and alliances at AMD. "With collaboration between AMD and leading studios like Rebellion, Square Enix and Xaviant, we can work together to optimize the image quality and performance of highly-anticipated titles for an intense gaming experience."

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Computer memory and software manufacturer Dataram  (DRAM) also announced that it had signed a deal with AMD to expand its operations outside of the North American market.

Shares of AMD closed up 2.2% on Wednesday to $3.97

TheStreet Ratings team rates ADVANCED MICRO DEVICES as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ADVANCED MICRO DEVICES (AMD) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. 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 analysis by TheStreet Ratings Team goes as follows:

  • 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 -9.92%.
  • This stock has increased by 48.46% 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.
  • You can view the full analysis from the report here: AMD Ratings Report
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