Reasonable Price-to-Earnings Ratio
Strong Price-to-Sales Ratio
Strong Return on Equity
High Gross and Net Profit Margins
Strong Liquidity Ratios
Low Debt Levels
🚀 Strong Financial Performance
🛠️ Diversified Product Portfolio
📈 Strategic Investments in R&D
🌟 Growth in NAND and Advanced Packaging
🧠 Innovation through Technology Inflections
High Price-to-Book Ratio
Elevated EV/EBITDA Ratio
Moderate Interest Coverage
📉 Dependence on Customer Concentration
⚠️ Market Risks and Uncertainties
Overall, Lam Research exhibits strong business quality through its operational execution, diversified product portfolio, and strategic investments in R&D. Future prospects look promising, particularly in NAND and advanced packaging, although customer concentration and market uncertainties pose risks.
Analysis Date: January 29, 2025
Last Updated: March 12, 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
$128.43
Current Market Price: $58.93
IV/P Ratio: 2.18x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
54.0%
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 LRCX
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (17.71)
P/B ratio ≤ 1.5 (8.63)
Current ratio ≥ 2.0 (2.54x)
Long-term debt < Net current assets (0.54x)
Margin of safety (54.0%)
LRCX does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The return on equity is 50.75%, indicating excellent profitability and efficiency in generating returns for shareholders.
With a gross profit margin of 47.75% and a net profit margin of 26.49%, LRCX showcases strong profitability and effective cost management.
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
50.75%
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
6.00%
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
47.75%
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
26.49%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 2.54 and quick ratio of 1.73 indicate that LRCX has sufficient liquidity to cover its short-term liabilities.
The debt-to-equity ratio is 0.57, indicating a conservative approach to debt, which enhances financial stability.
While an interest coverage ratio of 26.23 is strong, it suggests that there is some reliance on debt financing.
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
0.57x
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
Q2 2025
Current Ratio
Current assets divided by current liabilities
2.54x
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
Q2 2025
Lam Research closed out 2024 with solid performance, achieving revenue, gross margin, operating margin, and EPS above guidance midpoints. The total revenue for 2024 reached $16.2 billion with a diluted EPS of $3.36.
The company has broadened its exposure across end-market device segments, with notable growth in DRAM and Foundry Logic, and has a strong product portfolio critical for AI device manufacturing.
Lam Research has made strategic investments in R&D to enhance its product offerings and operational execution, which is yielding important product advances like Cryo 3.0 technology.
The company faces challenges due to customer concentration, especially with reduced spending from specific customers in China, which could impact future revenue streams.
Lam Research anticipates NAND shipments to increase significantly as the industry transitions to higher layer counts, with expectations for over $3 billion in combined shipments for gate-all-around nodes and advanced packaging in 2025.
The company is positioned to benefit from technology inflections in DRAM and Foundry Logic, as well as the adoption of advanced processing technologies like carbon gapfill and moly.
The semiconductor industry is subject to fluctuations and potential downturns, especially with the ongoing geopolitical issues affecting customer relationships in China.