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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Applied Materials, Inc. (XNAS:AMAT) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
AMAT
Name:
APPLIED MATERIALS, INC. (XNAS:AMAT)
Sector:
2.51B
Industry:
Semiconductor Equipment & Materials
CEO:
Mr. Gary Dickerson
Total Employees:
27,000
Our Technological Advancement Rating
Our Rating:
A+
Technological advancement compared to industry is 1487.20% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF APPLIED MATERIALS, INC.(AMAT) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SEMICONDUCTOR EQUIPMENT & MATERIALS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
91.24
One Month Price Target:
$92.02
Six Month Price Target :
$95.92
Likely Price in One Year's Time:
Ticker:
$100.59
Likely Trading Range Today Under (Normal Volatility)
$90.85
Price Upper limit ($) :
$91.85
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$85.29
This week:
$77.93
This month :
$64.62
Other Primary facts
Market Cap:
77.68B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
860.31M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
12.81%
-20.36%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$118.85
$106.06
$63.63
$76.42
Medium risk (<10%) entry points
Buy Call
Sell Call
$101.90
Buy Put:
Sell Put:
$99.16
$80.55
$83.32
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
AMAT
Sharpe Ratio:
3.32%
Comparison:
AMAT, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 19.59% higher than the industry
& ratio is 45.56% higher than the market/S&P 500 average
Average Returns/Yield of
AMAT
Daily returns:
0.12%
Weekly returns:
0.58%
Monthly returns:
2.32%
Yearly returns:
28.31%
Comparison of returns:
Average annual returns/yield (last 3 years) is -1.54% below industry average
Classification:
AMAT, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.53
Statistical test of Returns:
AMAT has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.23%
Weekly Volatility:
7.23%
Monthly Volatility:
14.46%
Yearly Volatility:
50.09%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.99%
Volatility in last five trading days has been -69.36% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.52%
Weekly VaR:
-14.59%
Monthly VaR:
-29.18%
How Much Can the price of
AMAT
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-24%
Worst case (decline):
>85%
This translates to price declining to:
$68.91
This translates to price declining to:
$13.69
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
AMAT is a 105.95% riskier investment compared to the market/S&P 500 & is 76.44% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -13.67% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
AMAT
Beta in relation to market/S&P 500--1.53
Expected beta in 1 year's time:
0.923
Expected beta in 3 year's time:
1.306
Unlevered (debt free) Beta:
1.078
Beta in relation to Nasdaq (XNAS):
1.432
Beta in relation to all global stocks::
0.999
Beta Comparison & Analysis
Beta of competitors/peers::
1.405
Beta is 8.61% higher than peers
Average Industry Beta:
1.394
Beta is 9.41% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
41.32%
Sustainable growth rate is 60.60% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.143
Alpha is -8.56% below industry average alpha yield
Alpha is 909% higher than market/& is unsustainably high
Analysis of Cost of Capital of
AMAT
Equity cost of capital:
0.136
Equity cost of capital is 7.08% above industry mean WACC
Unlevered (without debt) cost of capital:
9.61%
Before-tax cost of debt:
3.98%
After-tax cost of debt:
3.14%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.14%
WACC is 5.57% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$28.87
Revenue growth rate per share of (3Y):
6.6
Annual revenue growth rate is -5.81% below industry average
EPS:
$7.49
Expected Annual growth rate of EPS (3Y):
35.50%
Expected future EPS growth rate is 14.26% higher than the Semiconductor Equipment & Materials industry
Free cash flow (FCF) per share:
$6.26
Balance sheet equity growth per share: 54.19%
Equity growth rate per share is 128.96% higher than the industry
Debt per share
$6.60
EBITDA per share
$9.79
Valuation Analysis Today of
AMAT
P/E Ratio:
12.21
P/E Ratio of Competitors/Peers:
24.42
P/E ratio is -50.00% lower than main peers & is -57.46% lower than the industry
Stock price/value with industry average P/E ratio: $214.96
AMAT is -57.55% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $23.62
Present value of the expected future dividends only: $8.80
P/S (Price to Sales ratio):
3.16
Price to sales ratio is -50.63% below the industry mean
P/B (Price to book value ratio):
6.6
Price to free cash flow: 14.58
Price to free cash flow ratio is -57.03% lower than the industry
Net income growth rate (3Y):
115.75%
Net income growth rate is -83.08% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 3.17%
Dividend yeild: 1.07%
Previous Dividend: $0.26
Previous adjusted dividend: $0.26
Previous Dividend: $0.98
Expected next dividend best case: $0.27
Expected next dividend worst case: $0.25
Average dividend payment (long-term): $0.23
Average dividend increase/decrease (growth rate) % per period: 2.22%
Expected next dividend payment date: 14/09/2022
Expected next dividend record date: 24/08/2022
Expected next dividend declaration date: 06/08/2022
Previous dividend payment date: 16/06/2022
Previous dividend record date: 26/05/2022
Previous dividend declaration date: 03/10/2022
Dividend History:
2022-05-25--$0.26
2021-11-24--$0.24
2021-05-26--$0.24
2022-02-22--$0.24
2021-08-25--$0.24
2021-02-24--$0.22
Dividend growth rate is -121.53% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
47.78%
Net debt to equity ratio:
4.15%
Debt to assets ratio:
22.34%
Net debt to assets ratio:
1.94%
Debt-to-asset ratio is -55.16% below industry average
Ability to repay debt:
Interest coverage ratio:
36.77
Interest coverage ratio is 89.03% more than industry average
Looking forward:
Debt growth rate:
4.37%
Annual debt growth is 448% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.777
Statistical significance of correlation:
AMAT has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.604
Stock price is 28.78% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.604
Correlation of price movement with Nasdaq (^IXIC):
0.002
Covariance of price movement with the market:
0.004
Kurtosis
3.563
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.388
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
AMAT
Gross Profit Margin Ratio:
190%
Operating Profit Margin Ratio:
31.80%
Operating profit margin is -808.39% lower than the industry
Net Profit Margin Ratio:
190%
Effective Tax Rate:
13.11%
Effective tax rate is 0.77% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
56.82%
Return on equity (ROE) is 299.66% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
26.57%
Return on assets (ROA) is 208.00% higher than the industry
Financial Leverage:
1.3x
Current Ratio:
2.51
Current ratio is -42.86% below industry average
Cash Conversion Cycle (days):
98.7
Cash conversion cycle is 69.50% above industry average
The remaining useful life of property plant & equipment is: 3.5 years
Stock based compensation to net income ratio:
1.75%
In-depth Efficiency Analysis
Revenue generated per employee:
919.8K
Each employee generates 57% more revenue than industry average revenue per employee
EBITDA generated per employee:
311.9K
Each employee generates 85% more EBITDA than industry average revenue per employee
Profit generated per employee:
250.2K
Each employee generates 129% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
93.1K
Each employee generates 441% more free cash flow than industry average revenue per employee
Assets/Capital per employee
360.0K
Each employee generates 441% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 11.24%
Growth rate in R&D investment/expenditure is -52.53% lower than the industry
Competitors/Peer firms of
AMAT
ADVANCED MICRO DEVICES, INC. (XNAS:AMD)
INTUIT INC. (XNAS:INTU)
MICRON TECHNOLOGY, INC. (XNAS:MU)
LAM RESEARCH CORPORATION (XNAS:LRCX)
ANALOG DEVICES, INC. (XNAS:ADI)
TEAM, INC. (XNYS:TISI)
FISERV, INC. (XNAS:FISV)
MARVELL TECHNOLOGY, INC (XNAS:MRVL)
QUALCOMM INCORPORATED (XNAS:QCOM)
Current Analyst Ratings
Strong buy�21%
Buy�63%
Hold�4%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
5/1/22
Revenue:
24.84B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
13.04B
11.80B
2.60B
650.00M
1.30B
654.00M
-
3.91B
107.00M
229.00M
416.00M
8.42B
7.90B
6.76B
7.78B
1.02B
6.76B
Statement of Cash Flow
Date:
Period:
102.00M
Differed Income Tax :
1.00M
Stock Based Compensation :
118.00M
Change in Working Capital :
633.00M
Accounts Receivables:
548.00M
Other Working Capital:
321.00M
Other Non-Cash Items:
12.00M
Net Cash Provided by Operating Activities:
2.66B
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 312000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
1/30/22
2022
Q1
5.26B
473.00M
5.74B
4.41B
4.53B
1.04B
15.71B
2.27B
3.48B
94.00M
2.03B
1.59B
262.00M
9.72B
-
25.43B
1.50B
76.00M
738.00M
2.40B
2.29B
6.26B
5.68B
1.59B
7.27B
-
13.54B
9.00M
33.83B
- 278000.0K
-
January 30, 2022 at 7:00:00 AM
16.94B
11.89B
25.43B
2.50B
5.76B
493.0M
318.00M
- 144000.00K
- 138000.00K
-
-
- 1803000.00K
- 214000.00K
- 235000.00K
- 2252000.00K
-
268.00M
5.37B
5.10B
2.66B
- 144000.00K
2.51B
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
AMAT
2023
2024
2025
2026
2027
$101.09
$171.77
$189.38
$208.80
$230.20