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Category: Stock Market and Applied Materials
Date: 15 May 2020 Stock Price: $54.54 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of materials engineering firm, Applied Materials
As we navigate the challenges created by COVID-19, we have rallied the company around safety, productivity and keeping our customers and the industry moving forward " |
About Applied Materials
Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible the technology shaping the future.
We provide a comprehensive portfolio of semiconductor and display services designed to help customers meet their manufacturing challenges. From startup to fab expansion, from pilot lines to mass production, we have a service plan to ensure your tools and fab are operating at peak performance.
We provide a comprehensive portfolio of semiconductor and display services designed to help customers meet their manufacturing challenges. From startup to fab expansion, from pilot lines to mass production, we have a service plan to ensure your tools and fab are operating at peak performance.
Overview of Applied Materials' 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Total revenue: $3.957 billion (up from $3.539 billion from the same quarter of the previous year)
- Revenues increased by 11.8% over the last 12 months
- Cost of sales: $2.208 billion (up from $2.009 billion for the same quarter of the previous year)
- Cost of revenues increased by 9.9% over the last 12 months
- Net income: $755 million (up from $666 million for the same quarter of the previous year)
- Diluted earnings per share: $0.82 (down from $0.70 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 923 million (down from 948 million for the same quarter of the previous year)
- Cash and cash equivalents: $5.281 billion
- Cash and cash equivalents per share: $5.72
- Cash and cash equivalents makes up 10.49% of Applied Materials' market capital
- Cash and cash equivalents makes up 24.2% of Applied Materials' total assets
- Accounts receivable: $2.625 billion
- Accounts receivable makes up 12 of AMAT's total assets
- Inventories: $3.725 billion
- Inventories makes up 17.1% of Applied Materials' total assets
- Shareholders equity in Applied Materials: $9.024 billion
- Shareholders equity per Applied Materials' share: $9.77
- Applied Materials' is trading at 5.6 times its shareholders equity. The number is relatively high as most firms trade at between 2 and 4 times their stockholders equity per share.
- For some perspective the average price to book value that firms in the S&P 500 trades at is 3.7 times. Read more about the S&P500 here.
- Cash generated from operations: $635 million
- Cash generated from operations per share: $0.69
Applied Materials' management commentary on their 2nd quarter 2020 earnings
SANTA CLARA, Calif., May 14, 2020 — Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its second quarter ended Apr. 26, 2020.
“As we navigate the challenges created by COVID-19, we have rallied the company around safety, productivity and keeping our customers and the industry moving forward,” said Gary Dickerson, president and CEO. “While the situation remains fluid, based on the visibility we have today, our supply chain is recovering, and underlying demand for our semiconductor equipment and services remains robust.”
“As we navigate the challenges created by COVID-19, we have rallied the company around safety, productivity and keeping our customers and the industry moving forward,” said Gary Dickerson, president and CEO. “While the situation remains fluid, based on the visibility we have today, our supply chain is recovering, and underlying demand for our semiconductor equipment and services remains robust.”
Gary Dickerson continued by saying "Looking further out, we are well-aware of global economic concerns. While I am not going to speculate on possible macro-scenarios, I will share some of the key assumptions that we’re using to guide our strategy which are based on carefully monitoring market indicators and staying very close to our customers.
Over the past several years, we made significant investments in state-of-the-art digital infrastructure, sensors and metrology, data science, machine learning and simulation. The combination of these technologies enables us to reduce product development cycles, speed up transfer of new technologies from lab to fab, and optimize cost, output and yield for our customers in volume production"
"Turning to the business outlook, while I see positive signs, there is still potential for COVID-related disruptions around the world, and we’re not providing revenue and earnings guidance for Q3." said Dan Durn, Senior Vice President and Chief Financial Officer
Over the past several years, we made significant investments in state-of-the-art digital infrastructure, sensors and metrology, data science, machine learning and simulation. The combination of these technologies enables us to reduce product development cycles, speed up transfer of new technologies from lab to fab, and optimize cost, output and yield for our customers in volume production"
"Turning to the business outlook, while I see positive signs, there is still potential for COVID-related disruptions around the world, and we’re not providing revenue and earnings guidance for Q3." said Dan Durn, Senior Vice President and Chief Financial Officer
Applied Materials (NASDAQ: AMAT) stock price history
The image below, obtained from Google, shows the stock price history of Applied Materials (NASDAQ: AMAT) for the last 5 years. And its been a excellent 5 years for stockholders of AMAT. 5 years ago the stock was trading around $22.50 and today its trading at $62.87. That's an impressive 179% return provided by Applied Materials stock over the last 5 years. The stock of AMAT is also currently trading a new 52 week high of $62.87 and is far away from its 52 week low, which is a clear indication that short term momentum and sentiment of the stock of Applied Materials is very positive.
Recent Google searches for AMAT stock price
The graphic below shows Google search trends for AMAT stock price over the last 12 months in the United States as obtained from Google Trends. It shows that there is pretty consistent interest in the stock price of AMAT.
Recent coverage of Applied Materials (NASDAQ:AMAT)
The extract below shows recent coverage of Applied Materials as obtained from TheStreet.com
Shares of Applied Materials (AMAT) were falling after hours Thursday after the company reported earnings and revenue that missed fiscal second quarter expectations. The Santa Clara-based company reported a 12% increase in revenue year over year to $3.96 billion while earnings rose 27% year over year to 89 cents per share.
Analysts were expecting the company to report earnings of 95 cents per share on revenue of $4.15 billion. Applied Materials shares fell 2.1% to $53.30 after hours. "As we navigate the challenges created by COVID-19, we have rallied the company around safety, productivity and keeping our customers and the industry moving forward,” said Gary Dickerson president and CEO. “While the situation remains fluid, based on the visibility we have today, our supply chain is recovering, and underlying demand for our semiconductor equipment and services remains robust.”
Read the full article here
Shares of Applied Materials (AMAT) were falling after hours Thursday after the company reported earnings and revenue that missed fiscal second quarter expectations. The Santa Clara-based company reported a 12% increase in revenue year over year to $3.96 billion while earnings rose 27% year over year to 89 cents per share.
Analysts were expecting the company to report earnings of 95 cents per share on revenue of $4.15 billion. Applied Materials shares fell 2.1% to $53.30 after hours. "As we navigate the challenges created by COVID-19, we have rallied the company around safety, productivity and keeping our customers and the industry moving forward,” said Gary Dickerson president and CEO. “While the situation remains fluid, based on the visibility we have today, our supply chain is recovering, and underlying demand for our semiconductor equipment and services remains robust.”
Read the full article here
Applied Materials (NASDAQ: AMAT) latest stock valuation
So based on the 2nd quarter 2020 earnings report of Applied Materials (NASDAQ: AMAT) what do we value Applied Materials (AMAT) stock at? Based on the earnings reported our valuation model provides a target price (full value price) for Applied Materials at $54.20 a stock (down from our 4th quarter 2019 earnings report valuation of Applied Materials).
We therefore feel that the stock of Applied Materials is fully valued and a good price long term fundamental or value investors should look to enter the stock at is at least 10% below our target price (full value price) which in this case is $54.20. We therefore believe a good entry point into Applied Materials stock would be around $48.80 or below.
We expect the stock of Applied Materials to trade in a narrow range around its current price in coming weeks and months
We therefore feel that the stock of Applied Materials is fully valued and a good price long term fundamental or value investors should look to enter the stock at is at least 10% below our target price (full value price) which in this case is $54.20. We therefore believe a good entry point into Applied Materials stock would be around $48.80 or below.
We expect the stock of Applied Materials to trade in a narrow range around its current price in coming weeks and months
Next earnings release of Applied Materials
It is expected that Applied Materials will release their 3rd quarter 2020 earnings report in mid August 2020