NEW YORK (TheStreet) -- Shares of Advanced Micro Devices (AMD) were falling 5.6% to $2.43 on heavy trading volume Friday after Micron Technology (MU) missed analysts' estimates in its fiscal third quarter and offered a light fiscal fourth guidance due to weak PC sales.
Micron reported earnings of 54 cents a share for the fiscal third quarter, below analysts' estimates of 57 cents a share. The company said revenue fell 3.3% year over year to $3.85 billion for the quarter, compared to analysts' estimates of $3.91 billion.
Looking to its fiscal fourth quarter Micron said it expects revenue of $3.45 billion to $3.7 billion, below analysts' estimates of $4.16 billion for the quarter.
AMD is a Sunnyvale, CA-based company that produces CPUs and graphics cards for PCs. The company recently announced its new high-end Fury X graphics card at the Electronic Entertainment Expo (E3).
About 23.3 million shares of AMD were traded by 2:41 p.m. Friday, above the company's average trading volume of about 13.4 million shares a day.
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. 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 42.73%, 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