Why Advanced Micro Devices (AMD) Stock Is Up Today

NEW YORK (TheStreet) -- Advanced Micro Devices (AMD) was gaining 2.3% to $3.97 Tuesday following the announcement of the Radeon R9 295X2, which the chipmaker claims is the "world's fastest graphics card."

The new graphics card combines two R9 Series GPUs in one card with a closed-loop, pre-assembled liquid cooling system. The two GPUs promises to run many games at maximum settings at 4K resolutions, while the liquid cooling system should keep the card cool and quiet.

The AMD Radeon R9 295X2 also uses AMD TrueAudio technology to bring virtualized surround sound to any stereo headset.

"AMD is thrilled to launch the AMD Radeon R9 295X2 graphics card, built on the same award-winning Graphics Core Next (GCN) architecture that powers the gaming industry," Matt Skynner, corporate vice president and general manager, Graphics Business Unit, AMD said in a press release. "This record-shattering dual-GPU card will enable industry-leading audio and visually stunning 4K gaming, proving once again that Radeon is gaming."

The AMD Radeon R9 295X2 will be available in late April for $1499.

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TheStreet Ratings team rates ADVANCED MICRO DEVICES as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ADVANCED MICRO DEVICES (AMD) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 37.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 119.04% and other important driving factors, this stock has surged by 72.41% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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.
  • 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.
  • 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.
  • You can view the full analysis from the report here: AMD Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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.

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