InvestorsObserver gives Advanced Micro Devices, Inc. (AMD) a strong valuation score of 90 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. AMD currently holds a better value than 90% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.
AMD has a trailing twelve month price to Earnings (PE) ratio of 128 which places it above the histroical average of roughly 15. AMD is currently trading at a poor value due to investors paying more than what the stock is worth in relation to its earnings. AMD‘s trailing-12-month earnings per share (EPS) of 0.74 does not justify its share price in the market. Trailing PE ratios do not factor in the company’s projected growth rate, thus, some firms will have high PE ratios caused by high growth recruiting more investors even if the underlying company has produced low earnings so far.
AMD‘s 12-month-forward PE to Growth (PEG) ratio of 1.23 is considered a poor value as the market is overvaluing AMD in relation to the company’s projected earnings growth due. AMD‘s PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company’s overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.
All together these valuation metrics paint a pretty poor picture for AMD at its current price due to a overvalued PEG ratio despite strong growth. The PE and PEG for AMD are worse than the average of the market resulting in a valuation score of 90.
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