Applied Materials manufactures materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries, used in smartphones, flat screen TVs and solar panels. The company was founded in 1967 and is based in Santa Clara, California.
AMAT Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for AMAT, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Applied Materials Inc ranked in the 42th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. In terms of the factors that were most noteworthy in this DCF analysis for AMAT, they are:
As a business, AMAT is generating more cash flow than 91.69% of positive cash flow stocks in the Technology.
The business' balance sheet reveals debt to be 5% of the company's capital (with equity being the remaining amount). Approximately only 17.33% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
AMAT's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 42.59% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of Applied Materials Inc? See ADBE, CDK, IT, PRGS, and SGH.
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Looking at Q4, Applied Materials (NASDAQ:AMAT) earned $1.28 billion, a 15.79% increase from the preceding quarter. Applied Materials also posted a total of $4.69 billion in sales, a 6.67% increase since Q3. Applied Materials earned $1.11 billion, and sales totaled $4.39 billion in Q3.Why ROCE Is Significant Changes in earnings and sales indicate shifts in Applied Materials's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed by a business. Generally, a higher ROCE suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q4, Applied Materials posted an ROCE of 0.12%.It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's re...