Applied Materials Inc

AMAT

Semiconductors & Related Devices

Mkt Cap

$184B

PE

25.19

Debt

$5.562B

Cash

$7.175B

EV

$182.4B

FCF

$6.805B

Market Cap

$184B

P/E Ratio

25.19

Debt

$5.562B

Cash

$7.175B

EV

$182.4B

FCF

$6.805B

Charts data: {"Earnings":[{"time":"2014-10-25","value":1072000000},{"time":"2015-10-24","value":1377000000},{"time":"2016-10-29","value":1721000000},{"time":"2017-10-28","value":3434000000},{"time":"2018-10-27","value":3313000000},{"time":"2019-10-26","value":2706000000},{"time":"2020-10-24","value":3619000000},{"time":"2021-10-30","value":5888000000},{"time":"2022-10-29","value":6525000000},{"time":"2023-10-28","value":6856000000}],"Sales":[{"time":"2014-10-25","value":9072000000},{"time":"2015-10-24","value":9659000000},{"time":"2016-10-29","value":10825000000},{"time":"2017-10-28","value":14537000000},{"time":"2018-10-27","value":17253000000},{"time":"2019-10-26","value":14608000000},{"time":"2020-10-24","value":17202000000},{"time":"2021-10-30","value":23063000000},{"time":"2022-10-29","value":25785000000},{"time":"2023-10-28","value":26517000000}],"Net Margins":[{"time":"2014-10-25","value":0.11816578483245149},{"time":"2015-10-24","value":0.14256134175380475},{"time":"2016-10-29","value":0.15898383371824482},{"time":"2017-10-28","value":0.2362248056682947},{"time":"2018-10-27","value":0.19202457543615603},{"time":"2019-10-26","value":0.1852409638554217},{"time":"2020-10-24","value":0.2103825136612022},{"time":"2021-10-30","value":0.25530069808784633},{"time":"2022-10-29","value":0.2530541012216405},{"time":"2023-10-28","value":0.2585511181506204}],"Assets":[{"time":"2014-10-25","value":13174000000},{"time":"2015-10-24","value":15308000000},{"time":"2016-10-29","value":14588000000},{"time":"2017-10-28","value":19419000000},{"time":"2018-10-27","value":17773000000},{"time":"2019-10-26","value":19024000000},{"time":"2020-10-24","value":22353000000},{"time":"2021-10-30","value":25825000000},{"time":"2022-10-29","value":26726000000},{"time":"2023-10-28","value":30729000000}],"Stockholders Equity":[{"time":"2014-10-25","value":7868000000},{"time":"2015-10-24","value":7613000000},{"time":"2016-10-29","value":7217000000},{"time":"2017-10-28","value":9349000000},{"time":"2018-10-27","value":6839000000},{"time":"2019-10-26","value":8214000000},{"time":"2020-10-24","value":10578000000},{"time":"2021-10-30","value":12247000000},{"time":"2022-10-29","value":12194000000},{"time":"2023-10-28","value":16349000000}],"ROE":[{"time":"2014-10-25","value":0.1362480935434672},{"time":"2015-10-24","value":0.18087481938788913},{"time":"2016-10-29","value":0.23846473603990578},{"time":"2017-10-28","value":0.3673120119798909},{"time":"2018-10-27","value":0.484427547887118},{"time":"2019-10-26","value":0.3294375456537619},{"time":"2020-10-24","value":0.3421251654377009},{"time":"2021-10-30","value":0.48077080101249287},{"time":"2022-10-29","value":0.5350992291290799},{"time":"2023-10-28","value":0.4193528656186923}],"ROA":[{"time":"2014-10-25","value":0.11712463944132381},{"time":"2015-10-24","value":0.11111836948001046},{"time":"2016-10-29","value":0.1486153002467782},{"time":"2017-10-28","value":0.20232761728204335},{"time":"2018-10-27","value":0.2772745175265853},{"time":"2019-10-26","value":0.18429352396972246},{"time":"2020-10-24","value":0.19711000760524314},{"time":"2021-10-30","value":0.26675701839303},{"time":"2022-10-29","value":0.2914016313702013},{"time":"2023-10-28","value":0.251098311041687}]}

Applied Materials, Inc. engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. The company operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. Applied Materials, Inc. was incorporated in 1967 and is headquartered in Santa Clara, California.

Sector

10-Q
7/30/23
10-Q
4/30/23
10-Q
1/29/23
10-K
10/30/22
10-Q
7/31/22
10-Q
5/1/22
10-Q
1/30/22
10-K
10/31/21
10-Q
8/1/21
10-Q
5/2/21
10-Q
1/31/21
10-K
10/25/20
10-Q
7/26/20
10-Q
4/26/20
10-Q
1/26/20
10-K
10/27/19
10-Q
7/28/19
10-Q
4/28/19
10-Q
1/27/19
10-K
10/28/18
10-Q
7/29/18
10-Q
4/29/18
10-Q
1/28/18

DCF

Discounted Cash Flow Valuation of Applied Materials Inc

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$6.805B	$8.161B	$9.651B	$11.25B	$12.94B	$14.66B	$16.36B	$17.99B	$19.49B	$20.79B	$21.82B	$218.2B
DCF		$7.096B	$7.298B	$7.4B	$7.396B	$7.286B	$7.073B	$6.764B	$6.371B	$5.908B	$5.395B	$53.95B
Value	$121.9B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 22%

Earnings Stability 88%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	10-2015	10-2016	10-2017	10-2018	10-2019	10-2020	10-2021	10-2022	10-2023	TTM
Net Margin	14%	16%	24%	19%	19%	21%	26%	25%	26%	28%
ROA	11%	15%	20%	28%	18%	20%	27%	29%	25%	25%
ROE	18%	24%	37%	48%	33%	34%	48%	54%	42%	40%

What is the average Net Margin?

The average Net Margin over the past 5 years is +22.58%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +1.66%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +24.47%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +0.74%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +43.19%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +1.23%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	10-2015	10-2016	10-2017	10-2018	10-2019	10-2020	10-2021	10-2022	10-2023	TTM
Debt FCF	4.80	1.51	1.64	1.71	2.11	1.61	1.14	1.18	0.73	0.82
Debt Equity	0.60	0.46	0.57	0.79	0.72	0.52	0.45	0.45	0.34	0.31
MIN
Graham Stability	-	-	100%	100%	96%	100%	100%	100%	100%	96%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 0.82.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is -0.23.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.96.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has not been increasing in the past years.

Years	10-2016	10-2018	10-2020	10-2022	Trend
Revenue	14%	9%	16%	2.8%	-0.28%
Net Income	22%	16%	24%	5.1%	-2.9%
Stockholders Equity	12%	19%	16%	34%	3.2%
FCF	19%	19%	31%	65%	0.26%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +8.98%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is -0.28%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +15.66%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -2.87%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +19.04%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +3.19%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +19.13%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is +0.26%.