Applied Materials, Inc.
Applied Materials, Inc. Fundamental Analysis
Applied Materials, Inc. (AMAT) shows moderate financial fundamentals with a PE ratio of 37.84, profit margin of 27.78%, and ROE of 38.90%. The company generates $28.2B in annual revenue with moderate year-over-year growth of 4.39%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 77.8/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze AMAT's fundamental strength across five key dimensions:
Efficiency Score
ExcellentAMAT demonstrates superior asset utilization.
Valuation Score
WeakAMAT trades at a premium to fair value.
Growth Score
WeakAMAT faces weak or negative growth trends.
Financial Health Score
ExcellentAMAT maintains a strong and stable balance sheet.
Profitability Score
ExcellentAMAT achieves industry-leading margins.
Key Financial Metrics
Is AMAT Expensive or Cheap?
P/E Ratio
AMAT trades at 37.84 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, AMAT's PEG of 3.02 indicates potential overvaluation.
Price to Book
The market values Applied Materials, Inc. at 13.66 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 30.98 times EBITDA. This signals the market has high growth expectations.
How Well Does AMAT Make Money?
Net Profit Margin
For every $100 in sales, Applied Materials, Inc. keeps $27.78 as profit after all expenses.
Operating Margin
Core operations generate 29.10 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $38.90 in profit for every $100 of shareholder equity.
ROA
Applied Materials, Inc. generates $20.82 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Applied Materials, Inc. generates strong operating cash flow of $8.73B, reflecting robust business health.
Free Cash Flow
Applied Materials, Inc. generates strong free cash flow of $6.20B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $7.81 in free cash annually.
FCF Yield
AMAT converts 2.09% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
37.84
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
3.02
vs 25 benchmark
P/B Ratio
Price to book value ratio
13.66
vs 25 benchmark
P/S Ratio
Price to sales ratio
10.52
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.33
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.71
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.39
vs 25 benchmark
ROA
Return on assets percentage
0.21
vs 25 benchmark
ROCE
Return on capital employed
0.27
vs 25 benchmark
How AMAT Stacks Against Its Sector Peers
| Metric | AMAT Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 37.84 | 35.19 | Neutral |
| ROE | 38.90% | 1155.00% | Weak |
| Net Margin | 27.78% | -127067.00% (disorted) | Strong |
| Debt/Equity | 0.33 | 0.41 | Neutral |
| Current Ratio | 2.71 | 4.71 | Strong Liquidity |
| ROA | 20.82% | -314918.00% (disorted) | Strong |
AMAT outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Applied Materials, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
87.88%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
120.31%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
138.34%
Industry Style: Growth, Innovation, High Beta
High Growth