[OT] AMD @ $3.50/share ?!

[Xian01]

 So is it just me, or is anyone else WTFing over AMD's current stock price ?

 They have more in assets than their stock price is worth...

[meebs]

IF that is the case and this company can continue to operate profitably than maybe it is undervalued.

A large part of making money in the stock market is finding undervalued stock and buying them.

The hard part is actually knowing what is undervalued or not.

[Factory]

So is it just me, or is anyone else WTFing over AMD's current stock price ?

 They have more in assets than their stock price is worth...

While they are trading cheaply in comparison to historic levels, we must analyze what value buying shares of the company represents.

Some points to consider:

• More debt than many other similar companies in it's industry.
• Had negative EPS for the last fiscal year.
• Very low return on equity and reinvested capital compared to it's peers.
• Does not pay a dividend (where as the current industry avg for semiconductor stocks is 2.08%)
• Has a -1.2% EPS growth rate in sales for the last fiscal year.

Those are some major points that greatly factor into AMD's shriveling share price.


For a comparative example, look at Intel (INTC). Some points to consider:

• 10.24 P/E ratio, which is lower than 80% of it's peers.
• Higher gross margins (~64%)
• Higher return on equity (~25%)
• Higher return on invested capital than pretty much the entire semiconductor industry. (21%)
• 8.1% EPS growth rate for last fiscal year.
• Currently pays a 3.7% dividend, with a dividend growth rate of ~24%
• 12.6% sales growth year over year.

Intel's market cap is 121 billion while AMD has a market cap of 2.4 billion. Intel literally dwarfs AMD in their industry and overall is a fundamentally much stronger company. On top of this, Intel is positioned with large clients and ventures in global markets that are still booming (think smartphones.) Due to the size of Intel, they will likely be able to keep their gross margins much higher than competitors, and AMD just can't compete with that.

Of course, this is just a very basic fundamental observation and comparison, but I think it illustrates some points that may help you form an answer to your post. If you have more questions, feel free to PM me.

[segabtc]

psst do a search for a NEW GPU Supercomputer they are putting together. STUPID GPU POWER!!!! google is your friend. see if this will help out stock price.

[Xian01]

Intel's market cap is 121 billion while AMD has a market cap of 2.4 billion. Intel literally dwarfs AMD in their industry and overall is a fundamentally much stronger company. On top of this, Intel is positioned with large clients and ventures in global markets that are still booming (think smartphones.) Due to the size of Intel, they will likely be able to keep their gross margins much higher than competitors, and AMD just can't compete with that.

Some great points. Thank you very much for taking the time of doing that analysis. Most appreciated.

I'm just a bit curious that it's so low considering AMD's hardware is powering the next gen video game consoles ("XBox 720" and "PS4")

http://www.tomshardware.com/news/PlayStation-Xbox-Radeon-APU-Orbis,15247.html

[Melbustus]

I concur with Factory about INTC. And the fact that they dropped guidance (due to macro/cyclical reasons) a couple days ago and are 5% cheaper than earlier this week just means it's an even better buy, in my opinion.

For me, the following are reasons why I'm bullish on INTC, long-term:

1) Nearly 4% dividend, and a history of steadily increasing it, even through 2008-2010 when damn near everyone else suspended or reduced their divs for at least a couple quarters. This is really important.
2) P/E under 10. This would be more appropriate if Intel had NO growth potential, and didn't offer a nice dividend.
3) I believe part of the reason for the depressed stock price (compared to the above fundamental valuation metrics) is that people (Wall St. analysts) are really negative on Intel's current mobile-processing position. Granted, they let ARM get *way* ahead and haven't paid serious attention to mobile until recently... But that just means there's huge opportunity for them. Intel will always be nearly a generation ahead of everyone else in fab technology because of their design/production integration; a really nice moat that can't easily be replicated. I think that in-and-of-itself is a pretty good reason to be long-term bullish on them wrt mobile processing.
4) The mobile pie is just going to get bigger and bigger for a number of years.
5) They dominate the traditional PC space, and there are no signs that that'll stop soon.

Disclosure: I'm not an expert, and this is just an opinion. Do your own due-diligence.

[fcmatt]

I concur with Factory about INTC. And the fact that they dropped guidance (due to macro/cyclical reasons) a couple days ago and are 5% cheaper than earlier this week just means it's an even better buy, in my opinion.

For me, the following are reasons why I'm bullish on INTC, long-term:

1) Nearly 4% dividend, and a history of steadily increasing it, even through 2008-2010 when damn near everyone else suspended or reduced their divs for at least a couple quarters. This is really important.
2) P/E under 10. This would be more appropriate if Intel had NO growth potential, and didn't offer a nice dividend.
3) I believe part of the reason for the depressed stock price (compared to the above fundamental valuation metrics) is that people (Wall St. analysts) are really negative on Intel's current mobile-processing position. Granted, they let ARM get *way* ahead and haven't paid serious attention to mobile until recently... But that just means there's huge opportunity for them. Intel will always be nearly a generation ahead of everyone else in fab technology because of their design/production integration; a really nice moat that can't easily be replicated. I think that in-and-of-itself is a pretty good reason to be long-term bullish on them wrt mobile processing.
4) The mobile pie is just going to get bigger and bigger for a number of years.
5) They dominate the traditional PC space, and there are no signs that that'll stop soon.

Disclosure: I'm not an expert, and this is just an opinion. Do your own due-diligence.

+1

I have been thinking of letting go my lockheed martin stock and buy intel due to govy mil cuts more then likely coming our way.

[Factory]

Intel's market cap is 121 billion while AMD has a market cap of 2.4 billion. Intel literally dwarfs AMD in their industry and overall is a fundamentally much stronger company. On top of this, Intel is positioned with large clients and ventures in global markets that are still booming (think smartphones.) Due to the size of Intel, they will likely be able to keep their gross margins much higher than competitors, and AMD just can't compete with that.

Some great points. Thank you very much for taking the time of doing that analysis. Most appreciated.

I'm just a bit curious that it's so low considering AMD's hardware is powering the next gen video game consoles ("XBox 720" and "PS4")

http://www.tomshardware.com/news/PlayStation-Xbox-Radeon-APU-Orbis,15247.html

There are positive aspects of nearly every company existence; you just have to appropriately weigh them vs the negatives. While the deals with next gen video game consoles may give a boost to AMD, those deals will certainty not relieve the company from the majority of the pressures it faces.

AMD does not look appealing to me on a fundamental basis. On relative terms vs the rest of the sector, it looks even less appealing.