AMD Earnings: What to Look For From AMD

1 year ago 211

Key Takeaways

  • Analysts estimation adjusted EPS of $0.47 vs. $0.13 successful Q2 FY 2020.
  • Gross borderline is expected to emergence YOY.
  • Revenue is expected to station the second-fastest maturation successful much than 4 years, driven by surging request and market-share gains.

Advanced Micro Devices Inc. (AMD) has enjoyed skyrocketing request for its semiconductors and machine processors arsenic millions of radical person worked remotely during the COVID-19 pandemic. Despite a planetary spot shortage, immoderate analysts accidental that AMD is taking marketplace stock from rival Intel Corp. (INTC) for the archetypal clip successful 15 years.

Investors volition look to spot if AMD tin support its torrid maturation erstwhile the institution reports net connected July 27 aft marketplace adjacent for Q2 FY 2021. Analysts expect that adjusted net per stock (EPS) volition much than triple year-over-year (YOY) arsenic gross astir doubles. AMD has performed good owed to beardown request during the planetary spot shortage adjacent though it's a "fabless" chipmaker and does not marque the silicon wafers, oregon chips, successful its products.

Investors volition besides absorption connected the company's gross margin, a cardinal metric crossed the semiconductor manufacture that measures the grade of operational ratio successful a company's business. Analysts estimation that AMD's gross borderline volition amended importantly YOY, reaching its highest level successful astatine slightest 18 quarters.

Shares of AMD took disconnected successful July 2020 and person acold outpaced the broader marketplace for overmuch of the past year. AMD shares pulled backmost sharply successful February, recouped portion of its losses by precocious April, past fell to little lows by mid-May 2021 aft Q1 FY 2021 net were reported. The banal concisely underperformed the market. Since the May low, AMD shares person rebounded and are present solidly outperforming the S&P 500. As of July 21, 2021, AMD shares person provided a 1-year trailing full instrumentality of 56.9%, good up of 33.8% for the S&P 500.

Source: TradingView.

AMD Earnings History

AMD adjusted EPS has grown astatine a torrid gait for astir of the past 4 years, with lone Q1 and Q2 FY 2019 seeing YOY declines successful this area. Q1 FY 2020, representing the archetypal information of the pandemic, saw adjusted EPS ascent by much than 600% YOY. Adjusted EPS continued to turn rapidly passim the pandemic, though astatine a slower gait successful consequent quarters. Analysts present estimation that adjusted EPS volition astir quadruple YOY to its highest level successful astatine slightest 18 quarters for Q2 FY 2021.

AMD's gross maturation has been conscionable arsenic consistent. In the past 18 quarters, the institution has posted conscionable 2 periods of YOY declines. Three of the apical 4 quarters arsenic measured by YOY gross maturation person taken spot successful the 3 astir caller quarters. Analysts expect that Q2 FY 2021 volition proceed this inclination arsenic gross climbs by much than 85% YOY. At that pace, gross could beryllium much than triple what it was conscionable 4 years agone successful Q2 FY 2017.

AMD Key Stats
  Estimate for Q2 FY 2021 Q2 FY 2020 Q2 FY 2019
Adjusted Earnings Per Share $0.47 $0.13 $0.04
Revenue (billions) $3.6 $1.9 $1.5
Gross Margin 47.0% 44.0% 40.7%

Source: Visible Alpha

The Key Metric

As mentioned above, investors volition besides look to AMD's gross margin. This cardinal metric measures gross profit, which is income minus outgo of goods sold, arsenic a percent of full sales. A institution tin summation its gross borderline by either expanding income oregon cutting costs, oregon a operation of both. Computer processor chips are essentially commodity goods, with small prime differentiation betwixt chips manufactured by antithetic companies. This means that producers person little pricing power, truthful the superior mode to boost margins is by keeping costs low, particularly during periods of anemic sales. At the aforesaid time, keeping a thin cognition besides allows machine processor spot companies to maximize profits erstwhile request is high. With the existent semiconductor shortage the cyclical quality of the manufacture could interaction AMD connected the proviso side, due to the fact that the institution doesn't marque the silicon spot earthy materials itself, and connected the request side, due to the fact that request for processors is up significantly.

AMD's gross borderline has continued to summation implicit the past respective years. Four years ago, successful Q2 FY 2017, gross borderline was 33.6%. It accrued to 37.2%, 40.7% and 44.0% successful the 2nd quarters of 2018, 2019 and 2020 respectively. Now, analysts foretell that gross borderline volition ascent to 47.0%, its highest level successful astatine slightest much than 4 years.

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  1. Barron's. "Why an Analyst Raised AMD’s Price Target by 459%." Accessed July 21, 2021.

  2. Advanced Micro Devices Inc. "AMD to Report Fiscal Second Quarter 2021 Financial Results." Accessed July 21, 2021.

  3. Visible Alpha. "Financial Data." Accessed July 21, 2021.

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