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Why Advanced Micro Devices (AMD) Stock Is A 'Hold' At TheStreet
BY Shawn Ingram | 06/11/14 - 03:52 PM EDT
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NEW YORK (TheStreet) -- TheStreet Ratings team reiterated its "hold" rating on Advanced Micro Devices (AMD_) Wednesday with a ratings score of C-.
Shares of AMD were gaining 2.4% to $4.30.
More than 17.8 million shares of AMD were traded by 3:45 p.m., compared to the daily average trading volume of about 20.3 million shares.
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TheStreet Ratings team rates ADVANCED MICRO DEVICES as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ADVANCED MICRO DEVICES (AMD) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, relatively poor performance when compared with the S&P 500 during the past year and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
The revenue growth came in higher than the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 28.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
ADVANCED MICRO DEVICES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ADVANCED MICRO DEVICES continued to lose money by earning -$0.11 versus -$1.59 in the prior year. This year, the market expects an improvement in earnings ($0.16 versus -$0.11).
38.44% is the gross profit margin for ADVANCED MICRO DEVICES which we consider to be strong. Regardless of AMD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMD's net profit margin of -1.43% significantly underperformed when compared to the industry average.
The debt-to-equity ratio is very high at 4.18 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AMD's quick ratio is somewhat strong at 1.26, demonstrating the ability to handle short-term liquidity needs.
Net operating cash flow has decreased to -$204.00 million or 31.61% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
You can view the full analysis from the report here: AMD Ratings Report
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