Attractive Price-to-Earnings Ratio
Strong Price-to-Sales Ratio
Strong Return on Equity
Healthy Profit Margins
Strong Liquidity Position
Low Debt Levels
Record Revenues
Strong Market Position in Key Technologies
High-Quality Margins
Innovative Growth Areas
Investment in R&D
High Price-to-Book Ratio
China Market Constraints
Volatility in ICAPS Market
Expected Slowdown in DRAM Growth
Overall, Applied Materials demonstrates strong business quality through record revenues, a solid market position in high-growth areas, and effective margin management. However, challenges in the China market and potential volatility in specific segments may impact future performance. The company's focus on innovation and R&D investment positions it well for future growth, despite some short-term uncertainties.
Analysis Date: February 13, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$300.01
Current Market Price: $126.71
IV/P Ratio: 2.37x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
57.99999999999999%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for AMAT
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (16.29)
P/B ratio ≤ 1.5 (5.55)
Current ratio ≥ 2.0 (2.68x)
Long-term debt < Net current assets (0.44x)
Margin of safety (57.99999999999999%)
AMAT does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
With a return on equity of 33.98%, AMAT demonstrates effective use of equity financing to generate profits, indicating high operational efficiency.
Gross profit margin of 47.74% and net profit margin of 22.95% show that AMAT maintains strong profitability at various stages of its operations.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
33.98%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
3.55%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
47.74%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
22.95%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
A current ratio of 2.68 indicates that AMAT has a strong capacity to cover its short-term liabilities, suggesting robust liquidity.
With a debt-to-equity ratio of 0.35 and debt-to-assets ratio of 0.20, AMAT is in a good position to manage its debt, indicating financial stability.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.35x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q1 2025
Current Ratio
Current assets divided by current liabilities
2.68x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q1 2025
Applied Materials reported record revenues in Q1 fiscal 2025, surpassing the previous high set last quarter, indicating strong demand and effective business strategies.
The company has a leading position in critical semiconductor technologies such as leading-edge logic, DRAM, and advanced packaging. They expect to capture over 50% market share in gate-all-around technologies, highlighting their competitive advantage.
The non-GAAP gross margin of 48.9% reflects a favorable product mix and successful value-based pricing strategies, showcasing operational efficiency.
New trade rules have constrained the ability to serve the China market, leading to an estimated revenue impact of $400 million in fiscal 2025, which could affect overall growth.
Applied Materials is focusing on key areas like AI, advanced packaging, and materials engineering, which are expected to drive growth in the semiconductor industry, particularly with the growing demand for energy-efficient technologies.
The company is making significant investments in R&D, which are aimed at enhancing their technology portfolio and fostering high-velocity co-innovation with customers, positioning them well for future advancements.
The ICAPS market has shown volatility, and the company has less visibility on its growth compared to other segments, which could impact overall performance.
While there is ongoing demand for DRAM, the company anticipates challenges due to tough year-over-year comparisons, particularly affecting revenue from Chinese customers.