Outsourced semiconductor manufacturing and testing company Amkor Technology, Inc. (AMKR) is currently soaring on bullish market sentiment backed by an anticipated macroeconomic recovery.
President Biden’s desire to make American products highly competitive in the global economy has been driving investor optimism over the domestic semiconductor industry, allowing AMRK to gain 57% year-to-date. The stock has gained 140.9% over the past nine months, and 91.2% over the past year.
AMKR was added to the S&P Mid-Cap 400 index on February 16, before the markets opened. This helped the stock hit its 52-week high of $26.07 during the trading session, registering a 382.8% gain since its March low. We think President Biden’s plan of an increased crackdown on the Asian giant amid a rebounding economy will likely take AMKR to fresh highs soon.
Here’s what could shape AMRK’s performance in the near term:
Record Annual Results and Growth History
AMKR’s net sales have increased 24.6% year-over-year to a record $5.05 billion for the year ended December 31, 2020. Its operating income rose 96.1% from the same period last year to $457 million, while its net income increased 179.3% from its year-ago value to $338 million. Its EPS has risen 180% year-over-year to $1.40 in fiscal 2020.
The company has maintained this growth trajectory over the past three years. Its revenue has increased at a CAGR of 6.3% over the past three years, while its EBIT rose at a CAGR of 16.9% over this period. The company’s EPS and levered free cash flow both increased at a CAGR of 8.4% over the past three years.
Trading at a Discounted Valuation
In terms of non-GAAP forward p/e, AMKR is currently trading at 12.46x, 53.9% lower than the industry average 27x. The company’s non-GAAP forward PEG ratio of 0.76 is 62.6% lower than the industry average 2.03.
Furthermore, AMKR’s forward price/sales and price/cash flow rations of 1.02x and 6.27x, respectively, compare favorably with their industry averages.
Favorable POWR Ratings
AMKR has an overall rating of B, which equates to Buy in our proprietary POWR Ratings system.
The stock has an A grade for Value, and B for Momentum and Sentiment, which is justified given its relative undervaluation and substantial profitability. AMKR’s trailing 12-month net Income margin of 6.7% is 47.8% higher than the industry average 4.53%. Also, the company’s trailing 12-month ROE, ROA and ROTC values of 15.77%, 6.73% and 8.2%, respectively, compare favorably with their industry averages.
AMKR is ranked #10 of 98 stocks in the A-rated Semiconductor & Wireless Chip industry. In addition to the grades I’ve highlighted, you can check out AMKR’s ratings for Growth, Stability and Quality here.
There are 50 other stocks in the Semiconductor and Wireless Chip industry with an overall rating of A or B. Click here to see them.
The rising demand for smartphones and electronics in the wake of the coronavirus pandemic and for next generation automobiles have allowed AMKR to generate record revenues and earnings. With President Biden’s foreign policy inclining toward the development of domestic industries, the U.S.-based AMKR is expected to benefit significantly in the long run. So far, the semiconductor industry has been significantly consolidated in China. However, Biden’s plan of an increased crackdown on the Asian giant amid a rebounding economy will likely take AMKR to fresh highs soon.
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AMKR shares were trading at $23.59 per share on Monday afternoon, down $0.08 (-0.34%). Year-to-date, AMKR has gained 56.43%, versus a 3.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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