AMAT  Applied Materials Inc.

Exchange

NASDAQ

Sector

Technology

Industry

Semiconductors

Market Cap.

47.45B

Vuru Grade

52.85/100

Current Price

$44.30
+1.18 (+2.74%)

Growth Price

$18.60
Overvalued by 58.00%

Stability Price

$8.11
Overvalued by 81.70%

Company Metrics

  • P/E 15.75
  • P/S 3.33
  • P/B 5.3
  • EPS 2.81
  • Cash ROIC 18.76%
  • Cash Ratio 1.03
  • Dividend 0.4 / 0.93%
  • Avg. Vol. 10.53M
  • Shares 1.07B
  • Market Cap. 47.45B

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 beats profit estimates, shares rise
Reuters - Aug 17, 2017
In August, analysts at Gartner Inc forecast worldwide semiconductor capital spending to increase 10.2 percent in 2017, to $77.7 billion mostly driven by continued aggressive investment in memory chips.
Applied Materials, Estée Lauder Among Friday's Gainers - Nasdaq
3 Stocks to Watch on Friday: Foot Locker, Inc. (FL), Gap Inc (GPS) and Applied ... - Investorplace.com
Earnings Preview: What To Expect From Applied Materials On Thursday
Forbes - Aug 16, 2017
Applied Materials Inc. is scheduled to release earnings after Thursday's close. Applied Materials hit a record high of $57.50/share in 2000 and is currently trading near $43/share.
Applied Materials Inc. Reports 69% Advance In Q3 Profit
Nasdaq - Aug 17, 2017
(RTTNews.com) - Applied Materials Inc. ( AMAT ) revealed earnings for its third quarter that gained ground compared to the same period last year.
Earnings Reaction History: Applied Materials, Inc., 40.0% Follow-Through ...
Nasdaq - Aug 17, 2017
Applied Materials, Inc. ( AMAT ) is due to issue its quarterly earnings report in the upcoming extended-hours session.
Applied Materials (AMAT) Q3 Earnings: Is Surprise in Store?
Nasdaq - Aug 14, 2017
Applied Materials, Inc.AMAT is set to report fiscal third-quarter 2017 results on Aug 17. Last quarter, it posted a positive earnings surprise of 3.95%.
Applied Materials stock jumps on third-quarter earnings and sales beat
MarketWatch - Aug 17, 2017
Applied Materials Inc. AMAT, +2.74% shares rose in the extended session Thursday after the company's third-quarter earnings beat Wall Street expectations.
Applied Materials Ready to Make an Acquisition?
Barron's - Aug 16, 2017
Similar to the peer group, we expect Applied Materials to meet or exceed the high end of its guide range when it reports fiscal third-quarter (ended July) results on Aug. 17 after the close.
Applied Materials (AMAT) Beats on Q3 Earnings and Revenues
Nasdaq - Aug 18, 2017
Applied Materials Inc.AMAT reported robust third-quarter fiscal 2017 results, with both top and bottom line surpassing our estimates.
Applied Materials: Growth At A Discount
Seeking Alpha - Jul 28, 2017
As I've said many times, shareholder-friendly management is a necessary precondition to convince me to invest in a given company, and in this regard, Applied Materials has not disappointed.
Grab the Beating Heart of the Chip Industry With Applied Materials, Inc. (AMAT ... - Investorplace.com
The Case for and Against Applied Materials, Inc. (AMAT) - StockNewsJournal
Ex-Dividend Reminder: Navigators Group, Discover Financial Services and ...
Nasdaq - Aug 18, 2017
Looking at the universe of stocks we cover at Dividend Channel , on 8/22/17, Navigators Group Inc (Symbol: NAVG), Discover Financial Services (Symbol: DFS), and Applied Materials, Inc. (Symbol: AMAT) will all trade ex-dividend for their respective ...
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.

$44.30 Current Price

$18.60 Growth Price (DCF)

Overvalued by 58.00%


Growth Rate Assumed by Market: 25.34%


Future Free Cash Flow Growth Rate: -2.9%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$8.11 Stability Price (EPV)

Overvalued by 81.70%


Discount Rate: 15.0%

$0.92 NCA Price

Overvalued by 97.93%

$18.19 Book Price

Overvalued by 58.95%


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