The Macerich Company (NYSE: MAC) is a famous American real estate investment trust that’s well known for its investment in shopping centres. The firm’s name is a combination of the names of its co-founders Mace Siegel and Richard Cohen. Recently, its stock went up by 9.07% from its latest closing price when compared to the 1-year high value of $32.36 and move down -268.56%, while MAC stocks collected -1.35% of loss with the last five trading sessions.
Mac Stock: All You Need to Know
Is The Macerich Company Worth an Investment?
The Macerich Company currently controls over 51 million square feet of leasable area. It scored price to earnings ratio above its average ratio, recording 13.74 times of increase in earnings at the present.
MAC Market Performance
Over the week, MAC stocks went down by 1.35%. However, there was a monthly jump of 28.93% and a quarterly performance of 54.17%, while its annual performance rate touched -72.33%. The simple moving average for the period of the last 20 days is -6.61% for MAC stocks with the simple moving average of -52.54% for the last 200 days.
Analysts’ Opinion on The Macerich Company (NYSE:MAC)
Many brokerage firms have already submitted their reports for MAC stocks, with Evercore ISI repeating the rating for MAC shares by setting it to “Underperform”. The predicted price for MAC socks in the upcoming period according to Evercore ISI is $14.50 based on the research report published on June 15, 2020.
Compass Point, on the other hand, stated in their research note that they expect to see MAC stock at the price of $9. The rating they have provided for MAC stocks is “Neutral” according to the report published on June 4, 2020.
Fundamentals of MAC Stock
The current profitability levels are settled at +8.90 for the present operating margin and +24.92 for gross margin. The net margin for The Macerich Company stands at +11.67. Total capital return value is set at 0.97, while invested capital returns managed to touch 1.43. Equity return holds the value 3.60%, with 1.10% for asset returns.
Based on The Macerich Company (MAC), the company’s capital structure generated 212.67 points for debt to equity in total, while total debt to capital is set at the value of 68.02. Total debt to assets is settled at the value of 63.23 with long-term debt to equity ratio rests at 1.34 and long-term debt to capital is 185.05.
The value for Enterprise to Sales is 10.30 with debt to enterprise value settled at 0.59. The receivables turnover for The Macerich Company is 6.66 with the total asset turnover at the value of 0.10.
Who are the stakeholders in the Macerich Company (NYSE:MAC)?
The largest stake in The Macerich Company (NYSE:MAC) was owned or held by Citadel Investment Group. It was reportedly holding $49.9 million worth of stock at the end of September. Later that was followed by Arrowstreet Capital with a $46.9 million holding position.
Other investors bullish on the company included Third Avenue Management, Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position, a comparison showed that Third Avenue Management allocated the biggest weight to The Macerich Company (NYSE:MAC), around 3.67% of its 13F portfolio. Berylson Capital Partners is also relatively very hopeful on the stock, earmarking 2.53 percent of its 13F equity portfolio to MAC.
As aggregate interest went up some big names have jumped into The Macerich Company (NYSE:MAC) headfirst. LMR Partners, which is run and managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the most valuable position in The Macerich Company (NYSE:MAC). LMR Partners had $4.4 million invested in the company at the end of said quarter. J. Alan Reid, Jr.’s Forward Management also made a $4.4 million investment in the stock during the quarter. The following funds were also among the new MAC investors: James Thomas Berylson’s Berylson Capital Partners, Donald Sussman’s Paloma Partners, and Minhua Zhang’s Weld Capital Management.
Stocks Similar to MAC Stock
Now we can take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Macerich Company (NYSE:MAC) but valued at a similar rate.
Comparing it to Ormat Technologies, Inc. (NYSE:ORA), Nektar Therapeutics (NASDAQ:NKTR), Axsome Therapeutics, Inc. (NASDAQ:AXSM), and Viper Energy Partners LP (NASDAQ:VNOM), this group of stocks’ market caps match MAC’s market cap.
If you take a look, you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $276 million. That figure was $223 million in MAC’s case. Nektar Therapeutics (NASDAQ:NKTR) is the most popular stock when compared to others. On the other hand Ormat Technologies, Inc. (NYSE:ORA) is the least popular one with only 16 bullish hedge fund positions.
The Macerich Company (NYSE:MAC) is not the most popular stock amongst the group that it was being compared against. However, notice that the hedge fund interest is still above average. Supposedly, this acts like a positive signal but we’d rather spend our time researching such stocks that hedge funds are piling on.
Now if you were to examine the calculations, it showed that the top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks went down and lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately MAC stocks weren’t nearly as popular as these 20 stocks when compared. In addition to that the hedge funds that were betting on MAC were disappointed as the stock returned negative. It was at -70.3% during the same time period and underperformed the market.
If you are keen on investing in large cap stocks with huge upside potential, the best stocks among hedge funds are great options for you since a lot of those stocks have already outperformed the market this year.
New margin rules kicked in from September 1st after the Securities and Exchange Board of India (SEBI) chose to not extend the deadline in order to implement the new rules on the margin pledge. Sebi’s new margin rules are going to increase transparency and stop brokerage firms and individuals from using the securities held by clients. These norms were initially released in February and were expected to come into effect from June 1st. However, that date was initially extended to August 1st and eventually to September 1st. Even though brokers and other participants were asking for some more time to get their systems up and running as per the new rules, SEBI decided that enough time had been given to make changes and refused any further extension.
Here are the new margin rules implemented by SEBI:
- The stock will stay in the investor’s demat account and will be able to get directly pledged to the corporation that does the clearing. Since the securities will continue to stay in the investors’ demat account, they can continue to enjoy all of their shares’ benefits.
- As per the old system, the brokers handled the stock margins. Investors were forced to either transfer their shares to the brokers’ account or give power of attorney (POA) to the broker. Unfortunately, that led to a lot of brokers cursing the POA.
- In case of any sale/purchase of shares, brokers are required to collect the margins from investors upfront. A penalty will be levied in case of a failure to do so.
- Brokers can not be assigned the Power of Attorney (POA) anymore. The investors used to give authority to the brokers by way of POA to execute transactions on their behalf. Those days are gone and the POA will not be available for pledging anymore.
- Investors willing to avail margins have to make a separate margin pledge.
What have analysts said about the changes?
“Earlier collecting upfront margin wasn’t mandatory, but under the new system, investors will have to pay at least 30% margin upfront to avail a margin loan,” says Angel Broking. Shares bought today cannot be sold tomorrow. Currently, an investor can use intraday realised profits for taking new positions on the same trading day. According to the new norms, you will be able to use it only after T+2 days in case of equity/stocks once you receive the delivery of shares in your account. Till now, clients needed to meet margin requirements in their account once at the end of the day. But, the new margin rules of SEBI will require them to fulfil their margin obligations at the beginning of the deal.”
“The change in margin system and securities pledge-repledging could undoubtedly bring disruptions in volumes of daily trading as there is insufficient preparation and validation by the participants in this system – viz Exchanges, Depositories, Depository participants, Clearing corp, Brokers and clients. We could witness further polarization of stocks in the markets for some time with the top 200-300 stocks seeing the most depth and liquidity. The securities currently pledged with the brokers need to undergo the new process, which so far is not smooth going by the runs conducted so far. Hence large traders are unsure as to whether they will have limits to trade on Sept 01 which may lead to a volume drop in both Cash and F&O segments that may last a few days/weeks. The short term trend of the markets seems to have turned down.”
Motilal Oswal Financial Services
“Going ahead, the market may remain under pressure due to introduction of new margin requirement in the cash segment from 1st September and geo-political tensions between India-China. Any sharp fall in the market would be a good buying opportunity for long term investors to add quality stocks in the portfolio.”
Snap (SNAP) stock has soared high after the first quarter results wildly overperformed compared to Wall Street’s estimates. This was especially impressive considering the fact that the COVID-19 epidemic has made companies cut their ad sending, and that’s the aspect that covered 98% of the firm’s revenue stream.
If you still haven’t guessed it, Snap is the owner of the famous smartphone app, Snapchat. Based out of Santa Monica, California, Snapchat is a type of social media app that can manipulate and enhance images in numerous ways, which can then be sent to other Snapchat users. It also has an expanding lineup of video content and games. Snapchat is wildly popular among the under-30 crowd. The images sent on Snapchat self destruct after being viewed and any screenshot sends a notification to the sender. Because of that, it is widely used by people to exchange sexually explicit pictures as well. Even famous celebrities like NBA stars Paul George and Draymond Green have been embroiled in scandals involving the exchange of sexually explicit pictures through Snapchat. Because Snapchat is image driven, it mainly competes with Instagram, the photo/video sharing app on Facebook’s platform.
Snap started trading publicly in 2017 and its IPO raised $3.4 billion. That gave it an astounding market valuation of $23.8 billion. That lifted Snap’s status as the largest U.S. listed IPO among tech companies since Facebook’s IPO. However, the celebrations didn’t really last long as Snap’s stock plunged the following day and continued falling for months.
After hitting a record low of 4.82 in December 2018, Snap stock eventually recovered and moved into a buy zone in January, when it hit a two-year high of 19.75. But after a fourth-quarter earnings report that missed expectations, followed by the Covid-19 disruption, Snap stock plunged to a one-year low of 7.89 in mid-March. The stock has rebounded since then.
Snap Stock: All You Need to Know
Instagram Stories – A Copy of Snapchat?
Snap has been under indirect technological assault from Facebook. The social media giant blatantly copied most of Snapchat’s best features and presented it as “Stories” on its Instagram platform (now available on Facebook and WhatsApp as well). Numerous key employees left Snap as it began losing momentum.
In an effort to combat Facebook’s aggression, Snapchat spent a lot of time in the development of new products on its Snapchat platform. The success of those brand new features has drawn in a steady flow of advertisers.
Last year, the company unveiled Snap Games, a live multiplayer gaming platform. It also added more augmented-reality features to its Snapchat platform. The platform also increased the range of original shows which were created exclusively for the Snapchat audience. The company also added various upgrades to its software. The company also reorganized its sales team and started focusing on growing in international markets like India, UK, Canada, France and Australia.
One of the popular new features on Snapchat is “Discover”. It’s like a news feed which curates and provides original content from different publications. It’s basically a news feed that provides original content from news publishers. It now includes programming that features pop culture, celebrities, doctors, teachers, workers and others citizens who share their experiences. The days of Snapchat being used as a tool for friends to chat with each other and share pictures, are gone.
Snap Stock Analysis
The revenue of Snap has been growing at a strong and steady double digit rate. In 2020, the
first-quarter revenue climbed 44% to $462 million, walloping consensus estimates of $427 million. The company reported an adjusted loss of 8 cents per share, smashing expectations of a 20-cent loss, according to FactSet.
But Snap pulled guidance for its second quarter due to Covid-19 market conditions. That didn’t seem to bother investors, as Snap stock soared more than 20% in reaction to the earnings report.
One of the biggest reasons behind that was the fact that daily active users of Snapchat jumped 20% to 229 million, beating Wall Street estimates of 225 million. That was up 5% from the previous quarter and 20% from last year.
There was a pullback in ad revenue in March due to Covid-19, but strong growth in the first two months of the quarter offset the slowdown. Year-over-year growth in January and February was approximately 58%, before declining to approximately 25% growth in March, the company said. Speaking about the firm’s earnings report, co-founder and CEO Evan Spiegel said:
“These high growth rates in the beginning of the quarter reflect our investments in our audience, ad products, and optimization, and give us confidence in our ability to grow revenue over the long term. The many difficult transitions and changes we made as a business over the past few years have positioned us well for the challenges ahead.”
Analysts’ Views On Snap Stock
With a price target of 18, Snap’s rating was upgraded from perform to outperform by Oppenheimer analyst Jason Helfstein. RBC Capital Markets analyst Mark Mahaney raised his price target on Snap stock to 21, from 18, with a rating of outperform. Given the company’s strong first-quarter performance, he wrote in a note to clients, “We believe the company is incrementally better positioned to deal with the coronavirus impact. Fundamentals were surprisingly positive.”
Brent Thill, an analyst for Jefferies raised his price target on Snap from 15 to 20, with a rating of buy. This is what Thill had to say in the note to the clients:
“First-quarter results far exceeded our expectations, we are starting to see increased evidence that Snap is moving away from being an experimental ad platform, as it saw a doubling of money committed via upfront ad payments vs. 2019.”
Is Snap Stock A Buy Now?
After the first quarter earnings reports were published, Snap’s stock shot above its 50-day and 200-day moving averages, both positive signs. In another positive sign, the stock’s relative strength line (it tracks the stock’s performance vs the S&P 500 index) is at a record high. However, Snap stock is not in the buy now range. It is extended and out of buy range. However, Snap stock did break out of the cup-with-handle formation and climbed higher than its buy point of 18.56. The buy point of 19.49 indicates a buy zone of 5% above the buy point.
Amid potential 737 Max order cancellations, Boeing’s stocks were recently listed as “Top Short” in cWall Street. The air around the company is that of uncertainty as the aircraft giant is reeling. The Chicago based aircraft manufacturing giant moved from its hometown of Seattle in 2001. That was a wildly unpopular move in the state of Washington as lots of jobs were lost because of the stunning relocation. The aircraft manufacturer has been in the doldrums recently, struggling very hard to make the most out of a situation which is a major strain on its resources. A recent company announcement said that Boeing will continue to test its revamped 737 models. However, if customers are unable to pay for orders placed before or during the Covid-19 pandemic, this won’t matter. Compared to how things were three months ago, the situation has definitely improved at Boeing, but it has struggled hard during the last three years.
The failure of last year’s 737, along with a slew of bad PR moves resulted in the aircraft giant registering major decreases in all key markers. Compared to the first quarter of 2019, the revenue has fallen by 26% in the first quarter of 2020. The Operating income losses have also been extreme, sitting (not so) pretty at a nearly $8 million decrease (from $10.1 billion to $2.1 billion) – a 79% loss in three years. All of this has resulted in a sheer drop in the EPS also. It has plummeted to near rock-bottom $1.12 from a much more welcoming $13.85 three years ago. However, if there’s one thing the company can take solace in, it’s the fact that once you’ve hit absolute rock-bottom, the only way is up. Moving forward, the firm has projected a 5.79% growth rate in revenue over the coming 12 months.
Recently, The Boeing Company [BA] had a contemporary bid of $178.44. That resulted in a 1.31% decline where 40.87 million shares exchanged hands over the last week. BA also got a boost of 2.98%. That change led to a market cap move of $97.79 billion. This was 100.49% below the 52 week high and -54.36% above the 52-week low. The company’s stock has a relative value of 0.89 while its trading capacity is that of 40.87 million shares in total.
According to Yahoo Finance news, Boeing was one of the two Chicago based companies that hosted a special event focused on the next generation of tech talent. The annual Chicago Science, Technology, Engineering and Mathematics (STEM) “Signing Day” was organized by the Motorola Solutions Foundation (NYSE: MSI) and Boeing (NYSE: BA) on July 9th. The event celebrates students from Chicago who are committed to studying in some of America’s (and the world’s) premier technical schools, colleges and universities. These talented students are expected to excel in popular STEM fields such as software development, engineering and user experience design. Excelling in such fields is bound to put them on a fast track to unprecedented success.
BA Stock: Analysis
The Boeing Company stock was most recently analyzed on June 25th, 2020. As a result of that analysis, the stock was downgraded with a Sell rating from Berenberg. That also increased its 12 month price target on the stock ($150). On June 16th, 2020, Bernstein Recapitulated a Market perform rating and elevated its amount target to $165. On June 8th, 2020, Seaport Global Securities Initiated a Buy rating and boosted its price target on this stock to $277. On May 21st, 2020, RBC Capital Markets initiated an Outperform rating and increased its price target to $164. On April 20th, 2020, The Benchmark Company Reiterated a Buy rating and decreased its price target to $180. On April 2htg, 2020, Citigroup downgraded it to a Neutral rating and boosted its amount target on this stock to $175. On March 27th, 2020, Argus upgraded to a Buy rating and boosted its target amount on this stock to $220. On March 23rd, 2020, Goldman upgraded to a Buy rating and improved its amount target to $173.
Over the last year of trading (52 weeks), The Boeing Company’s stock has performed in the range of $89 (lowest) to $391 (highest). The average 12 month amount mark as of now is $158 on Wall Street. At the latest closing bell, The Boeing Company’s shares were valued at $17844 each. Based on the average price forecast, the potential return for investors is expected to be around -11.42%.
When we talk about liquidity, The Boeing Company’s Current Ratio is 1.20. Meanwhile, turning our focus to liquidity, the Current Ratio for The Boeing Company [NYSE:BA] is 1.20. Likewise, Similarly, the Quick Ratio is almost identical while the Cash ratio is 0.10. When it comes to valuation, the stock’s amount to sales ratio is 2.41.
BA Stock: Fundamental Analysis
Based on the latest reports released by the Boeing Company, the firm reported quarterly sales of 16.91 billion, which represented a dip of 26.20% when compared to the first quarter of last year. This publicly-traded organization’s revenue is $475,227 per employee. That might seem like a large number but the income is actually -$3,948 per employee. The Boeing Company’s Gross Margin is currently at 10.90%, Operating Margin is -7.20%, Pretax Margin is -2.95, and its Net Margin is -0.83.
The organization’s principal structure has displayed its whole liability to whole principal at 143.27 and the whole liability to whole assets at 21.35. It shows enduring liability to the whole principal at 105.15 and enduring liability to assets at 0.16 while looking for an extended time period.
For the quarter which closed on March 30th, 2020, The Boeing Company reported negative earnings of -$1.7 per share. The aircraft manufacturer has hit rock bottom and is struggling really hard. But luckily for them, the only way to go now is up. And if anyone knows how to go up and fly, it’s The Boeing Company.
Evolus, Inc. is a customer-centric performance beauty company. Over the years since its inception, the company has produced a lot of breakthrough products in the field of performance beauty. Evolus also developed the first and only neurotoxin exclusively dedicated to aesthetics. It was approved by the US Food and Drug Administration in 2019 and is sold under the name Jeuveau (prabotulinumtoxinA-xvfs). It is manufactured in a state-of-the-art facility with the help of Hi-Pure technology. Evolus’ high technology platform powers Jeuveau. It has been designed to transform the existing aesthetic market by getting rid of all the friction points that customers face today.
More recently, the fortunes of Evolus took a turn for the worse and on July 7th, 2020, the shares of Evolus, Inc. plummeted quite precipitously. This was caused by the discovery by the Judge overseeing the International Trade Commission (ITC) case against Evolus and Daewoong. He found that the firm’s flagship Jeuveau anti-wrinkle cream was manufactured with the help of trade secrets that ere illegally acquired from Allergan and Medytox. The investors in Evolus, Inc. are planning a class action lawsuit against the firm.
Evolus Stock: All You Need to Know
As per a press release from Evolus on July 6th, 2020, Judge overseeing the ITC case released a Notice of Initial Determination, finding a violation of the Tariff Act of 1930. TheStreet went on to report that one of the recommendations made by the judge was that imports for the firm’s wrinkle creams should be barred for 10 years.
As per TheStreet, “The judge found that Jeuveau, produced by Newport Beach, Calif., medical-beauty company Evolus and South Korean health-care group Daewoong, is made with trade secrets stolen from Allergan and Medytox.”
As soon as this news was made public, Evolus, Inc. saw a steep decline of 30% in its share price.
Evolus Stock: Market Performance
Over the last 12 months, Evolus Inc. [EOLS] has traded in a range of $3.12 to $20.27. With a 30.83% decline after the humiliating reveal, the stock was sitting at a lowly $3.68 at the time of writing. To check whether the stock’s short-term amount has a thrust, its good to check stock’s recent movement. Over the last seven days, Evolus shares have witnessed a decline of 4.32% with a monthly amount drift of 4.72%.
Evolus Stock: Analysis
As far as analyst activity for Evolus Inc. [NASDAQ:EOLS] stock is concerned, the most recent one was on February 06, 2020, when it was Resumed with a Buy rating from Mizuho. On July 07, 2020, Mizuho Recapitulated a Neutral rating and elevated its amount target to $3. On November 26, 2019, SVB Leerink Initiated an Outperform rating and boosted its price target on this stock to $25. On September 05, 2019, Mizuho Resumed a Buy rating and increased its price target to $30. On June 28, 2019, Wells Fargo Initiated a Market perform rating and increased its price target to $16. On June 11, 2019, Barclays Initiated an Underweight rating and boosted its amount on this stock to $13. On March 20, 2019, SunTrust Initiated a Buy rating and boosted its target amount on this stock to $30. H.C. Wainwright elevated its amount target by recapitulating a higher weight for this stock.
Over the last year of trading, the Evolus Inc stock has oscillated between a low of $3.12 and a peak of $20.27. Currently, the 12 month mark as per the middling Wall Street Analysis is just $6.50. Evolus shares were valued at just $3.68 at the most recent market closing bell.
Key Ratios to watch out for
When we talk about liquidity, Evolus Inc’s Current Ratio is 5.60. Similarly, the Quick Ratio is almost identical while the Cash ratio is 5.31. When it comes to valuation, the stock’s amount to sales ratio is 9.84 while the amount to book ratio is 5.14.
Evolus Stock: Fundamental Analysis
This publicly-traded organization generates a revenue of $148,617 per employee. However, the organization’s income is -$383,123 per employee. Evolus Inc’s Gross Margin is currently 73.10%, its Pretax Margin is -300.82, and its Net Margin is -257.79. Looking atprofitability, the firm’s Return on Assets, Equity, Whole Principal & invested Principal are currently sitting at -43.68, -109.90, -68.37 and -65.22 respectively.
A quick glance at the organization’s principle structure showcases its whole liability to the whole Principal at 54.85 and the whole liability to whole assets at 40.15. Also on display are the enduring liability to the whole principal at 54.17 and enduring liability to assets at 0.40 while looking for an extended time period.
As of now, the company’s stock is sitting at 5.08 points at 1st support level. At the second support level, it is 4.84. But as of 1st resistance point, this stock is sitting at 5.58 and at 5.84 for 2nd resistance point.
Evolus Inc. [EOLS] reported its earnings at -$0.75 per share at the end of the fiscal quarter that ended on March 30th, 2020. As per Wall Street analysts, the expectations for Evolus Inc were to report its earnings at -$0.59/share signifying the difference of -0.16 and -27.10% surprise value. Comparing the previous quarter that ended on December 31st, 2020, the stated earnings were -$0.47 calling estimates for -$0.73/share with the difference of 0.26 depicting the surprise of 35.60%.
Advanced Micro Devices, better known as AMD, is one of the world’s leading chip makers, along with Intel and NVIDIA. More than a decade ago, AMD divested its semiconductor manufacturing arm which led to the formation of GlobalFoundries. This move was made during the time of the Great Recession. At that point of time, it was necessary for the company to survive. AMD also maintained its long term vision of refocusing on technology, chip design and better investment returns. That focus turned out to be extremely useful as AMD’s stock has risen 2,000% since 2009. While it hasn’t been able to depose Intel from the top of the CPU manufacturing sector or NVIDIA from the top of the GPU manufacturing sector, it has definitely made great strides in those fields and has given its competitors a run for their money at times.
AMD Stock: All You Need To Know
What are the prospects of the AMD stock?
At this point, AMD is a large chip company in its own right. Now with a market cap of $60 billion, it could have been labeled an investment portfolio millionaire-maker stock a decade ago when it was trading for pennies compared to today’s AMD dollar. But those were vastly different times and AMD was truly struggling back then.
However, the chip industry is massive. The whole world invests over hundreds of billions in this sector and it’s in a state of perpetual growth. AMD’s biggest competitors, Intel and NVIDIA are valued at $250 billion and $229 billion, respectively. There’s a lot of room for AMD to make inroads.
What drives AMD’s growth?
But AMD isn’t simply growing by picking up scraps from its larger peers. In fact, arguments can be made that AMD’s CPU lineup is superior. And while NVIDIA charges a premium for its advanced GPU hardware for a reason, even NVIDIA has made use of some of AMD’s wares in its designs (like with the DGX A100 data center units, which use two AMD EPYC server processors). The next-gen gaming graphics featuring ray tracing were kicked off by NVIDIA a few years ago, but AMD’s own ray tracing-enabled GPUs will power the new Sony Playstation 5 and Microsoft Xbox Series X.
If cloud-based video game streaming takes off and kills the game console (unlikely), AMD won’t be left out in the cold here either. Its chips are helping power some of the data centers doing the heavy graphics lifting in the cloud. Simply put, even though AMD’s revenue has skyrocketed in the last few years, computing power for businesses and consumers alike is still in the midst of a big upgrade cycle. There could be plenty left in the tank for AMD.
AMD returned to sales and earnings growth in the third quarter of 2019 after two consecutive down quarters. Like other chipmakers, AMD was affected by a cyclical downturn in demand. AMD matched the earnings target set by Wall Street for the first fiscal quarter and exceeded the views on sale.
The chipmaker earned an adjusted 18 cents a share on sales of $1.79 billion in the March quarter. When compared on a year-by-year basis, the sales of AMD went up by 40%, while the earnings went up by 200%. For the second quarter, AMD expects to generate sales of $1.85 billion, based on the midpoint of its outlook. It did not give a target for earnings per share. Wall Street was modeling AMD earnings of 21 cents a share on sales of $1.92 billion in the June quarter. In the year-earlier period, AMD earnings were 8 cents a share on sales of $1.53 billion.
AMD Stock Technical Analysis
In July 2015, AMD stock reached its four-decade low of 1.61 per share. However, that turned out to be the rock bottom as the share has made a strong recovery since then. It reached an all-time high of 59.27 on February 19th just before the market turned south on coronavirus fears.
On June 10th, AMD stock tried to break out from a third-stage cup-with-handle base with a buy point of 58.73. It popped as high as 59 but ended the day at 57.44.
Is the AMD stock a buy now?
Granted, the problem with the semiconductor industry is that, though it’s technology, it’s also manufacturing. Manufacturing businesses tend to be very cyclical in nature. It’s tough to manage the cycle and sustain growth. Looking at history, it’s something that AMD has still not figured out. Even after it divested into GlobalFoundries for manufacturing and focused more on design. The sales have undeniably grown over the last 20 years, but the ride has been anything but smooth. Besides the highly cyclical nature of its business, AMD also suffers with a lack of profitability. Chip designing is a very expensive process and the company also has to stop the prices from reaching outrageous levels. Hence the profitability is low. Free cash flow (basic profits that get added or subtracted from the balance sheet, calculated as revenue less cash operating and capital expenses) has been negative more often than not over the last two decades. But over the last trailing 12 months, it’s been positive $431 million. On revenue of $7.25 billion over the same period, that’s good for a free cash flow profit margin of 6%, not a fantastic rate, but positive free cash flow is important. It means a chip company is capturing enough dollars to reinvest in research and development, which helps it sustain innovation and in turn sales growth over time.
AMD has also improved its balance sheet, paying off debt (down to $488 million at the end of March 2020) and increasing its cash and equivalents on hand (up to $1.39 billion). AMD is in better shape than it has been in a long time.
Will investing in AMD make you a millionaire in the long run? Probably not, since it isn’t a big enough firm as of now. Should you include it in a tech growth portfolio? Most definitely. While NVIDIA makes a strong case with its rate of innovation running in high gear, big profit margins, and deep pockets, and is the best option overall, but you can choose AMD over Intel in the long run. However, this chip stock has historically been volatile with a low-profit margin, so be ready for that if you invest in it.