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Bear of the Day: Advanced Micro Devices (AMD)

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Advanced Micro Devices (AMD - Free Report) is a Zacks Rank #5 (Strong Sell) saw earnings estimates slip despite beating the number recently.  Low to no growth this year and earnings estimates falling make this stock look very top heavy.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.


Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. It operates in four segments: Data Center, Client, Gaming, and Embedded segments. The company was incorporated in 1969 and is headquartered in Santa Clara, California.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of AMD, I see three beats and of the  Zacks Consensus Estimate and one earnings meet.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For Advanced Micro Devices I see annual estimates moving lower of late.

The current fiscal year consensus number moved lower from $3.45 to $3.01 over the last 60 days. 

The next year has moved from $4.53 to $4.14.  That move lower is probably the biggest deciding factor for this stock to be a Zacks Rank #5 (Strong Sell).

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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