Applied Materials (AMAT) stock: expect a recovery?

1:03 pm ET, 16 Aug 2018

Applied Materials, Inc. (AMAT) shares are trading at 47.44, down 0.15%. The company is announcing its earnings on Thursday after market close. 

The stock has been in the bearish territory.  Morgan Stanley downgraded Applied Materials from Overweight to Equal Weight and dropped the target to $54, which is still significantly above the current stock price. 

Applied Materials has been lagging semiconductor index funds (SOXX). Analysts are concerned about the company because of the oversupply of NAND and DRAM chips.  However, the company beat earnings estimates in each of the past four quarters.

What's AMAT stock price forecast? Our technical analysis shows that: 

  • The stock short-term sentiment (next 30 days) is trending positive;
  • The mid-term sentiment (3-6 months) is trending negative;
  • The long-term sentiment (9-12 months) is negative.

Over the last month, Applied Materials (AMAT) returned +2.97%.

Applied Materials (AMAT) forward P/E ratio is 10.64, and it’s low compared to its industry peers’ P/E ratio.

Applied Materials (AMAT) average analyst price target ($70.12) is 45.69% above its current price ($48.13).

For the latest price and information on Applied Materials, Inc., please visit Finstead and search for "AMAT price" or "AMAT news".

Applied Materials, Inc. (AMAT) Stock Guide

Updated at: 10:49 am ET, 17 Sep 2020

Before we start: if you're looking for AMAT stock price, you can quickly find it out by visiting Finny and typing "AMAT quote". If you're looking for a quick scoop on AMAT stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "AMAT". You'll get all this info in one place. Or you can just type "AMAT news" to get the latest stock news.

Looking to buy or sell Applied Materials, Inc. (AMAT)? Interested in getting the full scoop on AMAT, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this AMAT stock guide, we'll address key questions about AMAT, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are AMAT earnings?
2. What is AMAT dividend?
3. What is AMAT dividend yield?
4. What is AMAT stock forecast (i.e., prediction)?
5. AMAT buy or sell? What is AMAT Finny Score?
6. What are the reasons to buy AMAT? Why should I buy AMAT stock?
7. What are the reasons to sell AMAT? Why should I sell AMAT stock?
8. What are AMAT key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are AMAT earnings?

AMAT trailing 12-month earnings per share (EPS) is $3.44.

2. What is AMAT dividend?

AMAT forward dividend is $0.88.

3. What is AMAT dividend yield?

AMAT forward dividend yield is 1.43%.

Analyst Predictions

4. What is AMAT stock forecast (i.e., prediction)?

Based on AMAT analyst price targets, AMAT stock forecast is $76.80 (for a year from now). That means the average analyst price target for AMAT stock is $76.80. The prediction is based on 21 analyst estimates.

The low price target for AMAT is $62.00, while the high price target is $85.00.

AMAT analyst rating is Buy.

Analysis

5. AMAT buy or sell? What is AMAT Finny Score?

#{finnyScore:75}Our quantitative analysis shows 6 reasons to buy and 2 reasons to sell AMAT, resulting in Finny Score of 75.

6. What are the reasons to buy AMAT? Why should I buy AMAT stock?

Here are the reasons to buy AMAT stock:

  • Applied Materials is the chip equipment industry's standard bearer. The firm has the broadest product portfolio and offers customers the closest thing to a one-stop shop.
  • Applied has been streamlining operations to lower its cost structure and has reinvested some of the savings in R&D in recent quarters.
  • Applied has benefited from the rising popularity of flat-panel displays, which share manufacturing technologies with those used in semiconductor fabrication. As these displays have become more complex in recent years, demand for Applied's relevant tools has risen.
  • Applied Materials is a global leader in semiconductor equipment sales. The company is the number one equipment supplier to the global semiconductor industry. AMAT has been the industry leader for over twenty years, and is strongly positioned in the industry.
  • The company’s semiconductor business has done well last year, with important design wins in the CVD and PVD tools that are boosting revenues and market share. In fact, the company’s leadership businesses comprising Epi, PVD, Implant, CMP and RTP, boast high market share and unique capabilities. The company is quite optimistic as these businesses deliver important technology that will enable customers to drive major innovations in transistor and interconnect for 10-nanometer (nm) devices.
  • The company has been gaining considerable success in expanding beyond semiconductors. The company is in a very good position to take advantage of the transition from LCD to OLED technology. Rapid growth in large-format TVs has opened up opportunities to invest in new Gen 10.5 capacity and Applied Materials is currently tracking seven Gen 10.5 projects.
  • Market dynamics appear to be improving. Being an equipment company offering products for front-end applications, Applied is dependent on wafer starts at new and existing semiconductor facilities. Therefore, in an up cycle, the company would be able to sell its superior quality products and maybe pick up some market share.
  • Even though the current global economic risks prevail, spending in China is expected to increase. The company remains strongly positioned in China where it continues to see strong growth in semiconductor and display. Growing investments from Chinese domestic manufacturers have been the main catalysts.
  • AMAT quarterly revenue growth was 23.40%, higher than the industry and sector average revenue growth (0.08% and 0.89%, respectively). See AMAT revenue growth chart.
  • AMAT forward dividend yield is 1.43%, higher than the industry (0.55%) and sector (0.26%) forward dividend yields. See AMAT forward dividend chart.
  • AMAT PEG ratio (P/E adjusted for growth) is 0.72, which is low compared to its industry peers’ PEG ratios. See AMAT PEG chart.
  • AMAT average analyst rating is Buy. See AMAT analyst rating chart.
  • AMAT average analyst price target ($76.80) is above its current price ($55.79). See AMAT price target chart.
  • AMAT cash to debt ratio is 0.83, higher than the average industry (0.26) and sector (0.17) cash to debt ratio. See AMAT cash to debt chart.

7. What are the reasons to sell AMAT? Why should I sell AMAT stock?

Let's look at the reasons to sell AMAT stock (i.e., the bear case):

  • To maintain its market share, Applied must compete successfully in various segments with numerous firms that only specialize in their submarkets. Therefore, Applied may not have the best-of-breed product in every segment in which it competes.
  • Applied is exposed to the cyclical semiconductor industry, which means that its financial results can fluctuate considerably.
  • The chip equipment business is challenging, and Applied has not always been successful when entering new segments.
  • Capital equipment sales are typically high-value and AMAT is dependent on a relatively few high-value product sales to a limited customer base. Therefore, winning each individual order is very important. Moreover, the company also has to adopt an extremely customer-centric approach, maintaining very good relations with each individual customer.
  • The company has a high fixed cost structure. Therefore, margins suffer a lot when sales fall. On the other hand, the structure is necessary to support an increase in demand.
  • Growth depends and will continue to depend on the company’s ability to innovate. Applied Materials is vulnerable to intense competition and changing technology, commercialization methods, industry standards and seller and buyer needs. These call for frequent changes in product and service offerings, which in turn require heavy investments, putting pressure on its earning capacity.
  • AMAT profitability is declining. The YoY profit margin change was -4.42 percentage points. See AMAT profitability chart.
  • AMAT short interest (days to cover the shorts) ratio is 2.34. The stock garners more short interest than the average industry, sector or S&P 500 stock. See AMAT short interest ratio chart.

Key Stats

8. What are AMAT key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for AMAT:

Metrics AMAT
Price $57.24
Average Price Target / Upside $76.80 / 34.17%
Average Analyst Rating Buy
Forward Dividend Yield 1.43%
Industry Semiconductor Equipment & Materials
Sector Technology
Number of Employees 21,000
Market Cap $56.52B
Forward P/E Ratio 13.40
Price/Book Ratio 3.47
Revenue (TTM) $16.27B
YoY Quarterly Revenue Growth 23.40%
Profit Margin 19.58%

If you liked this analysis, check out Stock Guides for other stocks.

Follow Us