AMAT  Applied Materials Inc.

Exchange

NASDAQ

Sector

Technology

Industry

Semiconductors

Market Cap.

48.22B

Vuru Grade

52.85/100

Current Price

$44.73
+0.65 (+1.47%)

Growth Price

$18.48
Overvalued by 58.68%

Stability Price

$8.06
Overvalued by 81.99%

Company Metrics

  • P/E 18.50
  • P/S 3.67
  • P/B 5.79
  • EPS 2.42
  • Cash ROIC 18.76%
  • Cash Ratio 1.03
  • Dividend 0.40 / 0.91 %
  • Avg. Vol. 8.89M
  • Shares 1.08B
  • Market Cap. 48.22B

Company Description

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. Its Silicon Systems Group segment offers a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. It provides systems that perform primary processes used in chip fabrication, inc... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Applied Materials, Inc. (AMAT) Ex-Dividend Date Scheduled for May 23, 2017
Nasdaq - 21 hours ago
Applied Materials, Inc. ( AMAT ) will begin trading ex-dividend on May 23, 2017. A cash dividend payment of $0.1 per share is scheduled to be paid on June 15, 2017.
Why Traders Are Paying Attention To The Chart of Applied Materials, Inc. (AMAT) - NY Stock News
Applied Materials, Inc. (AMAT) Forecasted to Post Q3 2017 Earnings of $0.84 ... - BNB Daily (blog)
Applied Materials: Strong Quarter, Strong Buy
Seeking Alpha - May 19, 2017
Applied Materials blew out analyst expectations for the 6th consecutive quarter now, revenue and EPS for the quarter was higher than expected.
Applied Materials shares rise on earnings beat, strong outlook - MarketWatch
Applied Materials, Inc. (AMAT) Stock Is the REAL Winner in Semiconductors - Investorplace.com
Applied Materials Inc. Reveals 129% Advance In Q2 Profit
Nasdaq - May 18, 2017
(RTTNews.com) - Applied Materials Inc. ( AMAT ) reported earnings for its second quarter that advanced compared to the same period last year.
Applied Materials Reaches Analyst Target Price
Nasdaq - May 19, 2017
In recent trading, shares of Applied Materials, Inc. (Symbol: AMAT) have crossed above the average analyst 12-month target price of $43.07, changing hands for $43.91/share.
Ex-Dividend Reminder: Pembina Pipeline, Applied Materials and CA
Nasdaq - May 19, 2017
Looking at the universe of stocks we cover at Dividend Channel , on 5/23/17, Pembina Pipeline Corp (Symbol: PBA), Applied Materials, Inc. (Symbol: AMAT), and CA Inc (Symbol: CA) will all trade ex-dividend for their respective upcoming dividends ...
Earnings Reaction History: Applied Materials, Inc., 50.0% Follow-Through ...
Nasdaq - May 18, 2017
Applied Materials, Inc. ( AMAT ) is due to issue its quarterly earnings report in the upcoming extended-hours session.
Applied Materials Inc: Up after 7th straight profit beat
Times of India - May 19, 2017
AMAT reports Q2 results just ahead of analysts' expectations, helped by strong demand for DRAM and flash memory chips. ** AMAT has beaten Street's profit estimates for the past 7 qtrs in a row.
The Technical Facts on Applied Materials, Inc. (AMAT)
The USA Commerce - 16 hours ago
We have gathered the technical data on Applied Materials, Inc. (AMAT), and see some interesting trends in the stock's behavior of late.
Applied Materials, Inc. (AMAT) Shouts Loudly With Its Technical Chart
NY Stock News - May 16, 2017
The technicals for Applied Materials, Inc. (AMAT) have taken shape, and with them a comprehensive picture has emerged.
Applied Materials Gets Price-Target Hikes Ahead Of Q2 Earnings - Investor's Business Daily
Top Analyst Upgrades and Downgrades: Applied Materials, Cerner, Cisco, J&J ...
24/7 Wall St. - May 15, 2017
Applied Materials Inc. (NASDAQ: AMAT) was reiterated as Buy and the price target was raised to $50 from $43 at Needham. Its shares closed at $43.44 on Friday, in a 52-week trading range of $19.54 to $43.64 and with a consensus analyst target price of ...
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for AMAT to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate AMAT's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$44.73 Current Price

$18.48 Growth Price (DCF)

Overvalued by 58.68%


Growth Rate Assumed by Market: 25.79%


Future Free Cash Flow Growth Rate: -2.9%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$8.06 Stability Price (EPV)

Overvalued by 81.99%


Discount Rate: 15.0%

$0.91 NCA Price

Overvalued by 97.96%

$18.19 Book Price

Overvalued by 59.34%


Excellent Cash Return on Invested Capital over the past 5 years

AMAT has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

AMAT has created $18.76 of cash for every $100 invested.
Figures in USD. Fiscal year ends in October
20122013201420152016
Free Cash Flow 1.69B 426.00M 1.56B 948.00M 2.21B
divided by
Invested Capital 7.90B 7.71B 7.19B 6.55B 7.21B
Cash ROIC 21.38% 5.53% 21.69% 14.48% 30.71%

Growing Return on Equity over the past 5 years

AMAT has been growing returns with capital that shareholders have invested. This is a positive sign and demonstrates that both the business and management performance are improving over time.

AMAT has generated $12.14 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in October
20122013201420152016
Net Income 109.00M 256.00M 1.07B 1.38B 1.72B
divided by
Stockholders' Equity 7.24B 7.09B 7.87B 7.61B 7.22B
Return on Equity 1.51% 3.61% 13.62% 18.09% 23.85%

Excellent Business Performance over the past 10 years

AMAT has been able to maintain profitability in good times and bad. This could mean AMAT has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

AMAT has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Free Cash Flow 1.94B 1.42B 84.24M 1.55B 2.22B 1.69B 426.00M 1.56B 948.00M 2.21B

Weak Balance Sheet

AMAT's financial position is not ideal. The key is to check whether AMAT is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Cash 2.37B 2.10B 2.21B 2.58B 6.24B 1.94B 1.89B 3.16B 4.97B 3.75B
Current Assets 6.61B 6.66B 5.69B 6.77B 10.36B 5.10B 5.64B 6.97B 9.26B 8.35B
Total Assets 10.65B 10.91B 9.57B 10.94B 13.86B 12.10B 12.04B 13.17B 15.31B 14.59B
Current Liabilities 2.37B 2.95B 1.94B 2.89B 2.79B 2.27B 2.44B 2.82B 3.80B 3.63B
Total Liabilities 2.83B 3.46B 2.48B 3.41B 5.06B 4.87B 4.96B 5.31B 7.70B 7.37B
Stockholder' Equity 7.82B 7.45B 7.09B 7.54B 8.80B 7.24B 7.09B 7.87B 7.61B 7.22B
Current Ratio 2.78 2.26 2.93 2.34 3.71 2.25 2.31 2.47 2.44 2.30
TL-to-TA 0.27 0.32 0.26 0.31 0.37 0.40 0.41 0.40 0.50 0.51

Low or No Reinvestment of Profits over the past 10 years

AMAT has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to AMAT operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Retained Earnings 10.86B 11.50B 10.93B 11.51B 13.03B 12.70B 12.49B 13.07B 13.97B 15.25B
Retained Earnings Growth - 5.87% -4.93% 5.28% 13.19% -2.53% -1.68% 4.68% 6.85% 9.20%

Competitive Industry over the past 10 years

AMAT is likely operating in an industry with medium to low barriers to entry. This may mean that AMAT doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that AMAT invests heavily in R&D and Sales, General & Administrative expenses.

Only $9.81 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Net Income 1.71B 960.75M -305.33M 937.87M 1.93B 109.00M 256.00M 1.07B 1.38B 1.72B
divided by
Revenue 9.73B 8.13B 5.01B 9.55B 10.52B 8.72B 7.51B 9.07B 9.66B 10.83B
Net Profit Margin 17.57% 11.82% -6.09% 9.82% 18.31% 1.25% 3.41% 11.82% 14.26% 15.90%

Strong Pricing Power over the past 10 years

AMAT has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$40.02 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Gross Profit 4.49B 3.44B 1.43B 3.72B 4.36B 3.31B 2.99B 3.84B 3.95B 4.51B
divided by
Revenue 9.73B 8.13B 5.01B 9.55B 10.52B 8.72B 7.51B 9.07B 9.66B 10.83B
Gross Margin 46.15% 42.35% 28.54% 38.91% 41.46% 38.00% 39.83% 42.36% 40.92% 41.67%

Medium Capital Intensity over the past 10 years

AMAT has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

39.19% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Capital Expenditure 264.78M 287.91M 248.43M 169.08M 209.00M 162.00M 197.00M 241.00M 215.00M 253.00M
divided by
Net Income 1.71B 960.75M -305.33M 937.87M 1.93B 109.00M 256.00M 1.07B 1.38B 1.72B
Capital Expenditure Ratio 15.48% 29.97% -81.36% 18.03% 10.85% 148.62% 76.95% 22.48% 15.61% 14.70%

Very Strong Dividend History over the past 10 years

AMAT has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests AMAT is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Dividend Paid 305.67M 325.41M 319.51M 348.52M 397.00M 434.00M 456.00M 485.00M 487.00M 444.00M
divided by
Shares Outstanding 1.43B 1.37B 1.33B 1.35B 1.33B 1.28B 1.22B 1.23B 1.23B 1.12B
Dividend Paid Per Share 0.21 0.24 0.24 0.26 0.30 0.34 0.37 0.39 0.40 0.40
Price at Year End 16.36 9.43 13.33 13.70 10.64 11.26 17.49 25.36 18.96 32.27
Dividend Yield 1.31% 2.51% 1.80% 1.89% 2.81% 3.02% 2.14% 1.55% 2.10% 1.23%

Strong History of Stock Buybacks over the past 10 years

AMAT has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Shares Outstanding 1.43B 1.37B 1.33B 1.35B 1.33B 1.28B 1.22B 1.23B 1.23B 1.12B
Stock Bought Back - 3.82% 3.11% -1.16% 1.41% 4.15% 4.76% -0.97% 0.41% 9.86%
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Discussion
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1
Posted by LearningToFish  (on April 22, 2012)
Just wondering how the 4.82B of Invested Capital for 2011 was figured (?) I come up with Total Assets 13.86B - Excess Cash 4.10B - NIBCLS of Accounts Payable .484 & Accrued Liabilities .486 = 8.79.

I'm assured that I'm doing something wrong, but I'm not sure what - please advise! Thanks!
1
Posted by VuruSupport  (on April 25, 2012)
Hi LearningToFish,

Here's our formula for calculating Invested Capital:

Invested Capital = Stockholders Equity + Total Liabilities - Current Liabilities - Excess Cash

Excess Cash = Total Cash - (Current Liabilities - Total Assets)

For the Excess Cash formula, the section in brackets will only be subtracted if it's greater than 0

I hope that helps. Please don't hesitate to reach out over email (support at vuru dot co) if you have any other questions.

Victoria