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Advanced Micro Devices (AMD) Gains But Lags Market: What You Should Know

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Advanced Micro Devices (AMD - Free Report) closed at $50.28 in the latest trading session, marking a +0.36% move from the prior day. This move lagged the S&P 500's daily gain of 1.47%. Meanwhile, the Dow gained 2.32%, and the Nasdaq, a tech-heavy index, added 1.2%.

Heading into today, shares of the chipmaker had lost 3.17% over the past month, lagging the Computer and Technology sector's gain of 4.26% and the S&P 500's gain of 0.74% in that time.

AMD will be looking to display strength as it nears its next earnings release. In that report, analysts expect AMD to post earnings of $0.16 per share. This would mark year-over-year growth of 100%. Meanwhile, our latest consensus estimate is calling for revenue of $1.85 billion, up 21% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.01 per share and revenue of $8.39 billion. These totals would mark changes of +57.81% and +24.69%, respectively, from last year.

Any recent changes to analyst estimates for AMD should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. AMD currently has a Zacks Rank of #4 (Sell).

Investors should also note AMD's current valuation metrics, including its Forward P/E ratio of 49.51. This valuation marks a premium compared to its industry's average Forward P/E of 18.84.

We can also see that AMD currently has a PEG ratio of 1.23. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Electronics - Semiconductors industry currently had an average PEG ratio of 1.7 as of yesterday's close.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 59, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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