NEW YORK (TheStreet) -- Shares of Advanced Micro Devices (AMD - Get Report) were gaining 5.1% to $2.47 Wednesday after the chipmaker announced its new line of Radeon graphics cards at the Electronic Entertainment Expo in Los Angeles.
AMD introduced its new Radeon R9 Fury X GPU, which is calls the "most advanced and innovative GPU ever created for the enthusiast market" during a live webcast. The new GPU uses integrated High-Bandwidth Memory (HBM) which can dliver 60% more bandwidth than GDDR5 memory with a 4096-bit memory interface, according to AMD.
The company said the R9 Fury graphics card is capable of playing "the most demanding 4K games" with graphics settings turned up, and is ready for future APIs such as Microsoft's MSFT DirectX 12 and OpenGL 4.5.
AMD also announced the new R9 300 series for gamers who can't quite afford to R9 Fury but want to play games at 4K resolutions and the even more budget-conscious R7 300 series for gamers looking to play at 1080p and 1440p resolutions.
The company said the R9 Fury series will start at $429, while the R9 300 series will start at $199 and the R7 300 series starts at $109.
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 a few notable 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 800.0% when compared to the same quarter one year ago, falling from -$20.00 million to -$180.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness 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 133.41 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 1.30, demonstrating the ability to handle short-term liquidity needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.93%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 666.66% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ADVANCED MICRO DEVICES has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ADVANCED MICRO DEVICES reported poor results of -$0.53 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings (-$0.23 versus -$0.53).
- You can view the full analysis from the report here: AMD Ratings Report