AMATAMAT
US • TECHNOLOGY
$536.25
P/E
50.40
PEG
1.50
FCF Yield
1.1%
Rev Growth YoY
+11.4% YoY
Gross Margin
49.0%
Health Score
9/10
D/E Ratio
0.32
Confidence
MEDIUM
Business Snapshot
Applied Materials is a leading provider of semiconductor equipment and materials, manufacturing the wafer fabrication tools used to produce virtually every chip made globally. The company operates in the highly concentrated semiconductor capital equipment market, holding a dominant position as a critical supplier to foundries, memory makers, and integrated device manufacturers. As a large-cap company with a $446.84B market capitalisation and $29.02B in trailing twelve-month revenue, Applied Materials has immense financial scale and serves as a bellwether for the semiconductor industry. The company's defining characteristic is its deep integration into advanced chip manufacturing processes, creating significant customer-switching costs and a durable competitive moat.
Financial Health
Gross margin stands at a healthy 49.0%, with a strong net margin of 29.3%, indicating the company captures significant profit from each dollar of revenue. The balance sheet is in fortress territory, with a conservative Debt/Equity ratio of just 0.32x and a Current Ratio of 2.61x, providing ample liquidity and financial flexibility...
Risk Assessment
- VALUATION — P/E ratio of 50.4x is significantly elevated versus the sector average of 22x, implying high expectations for future growth and making the stock vulnerable to multiple compression.
- INSIDER ACTIVITY — Over the last 90 days, there have been 0 insider buys versus 9 insider sells, a net selling pattern that serves as a cautionary signal for existing shareholders.
- VALUATION DIVERGENCE — The Python DCF estimate of $103.5 and the market price of $536.25 diverge massively, creating a deep uncertainty about the stock's intrinsic value anchor.
- FCF / CASH BURN — While FCF is positive in absolute terms, the FCF yield of just 1.1% is extremely low, offering minimal cash return relative to the stock's current price.
- 52-WEEK POSITION — The current price of $536.25 is 27.5% below the 52-week high of $739.67, indicating the stock has seen significant selling pressure over the past year....
Gross margin stands at a healthy 49.0%, with a strong net margin of 29.3%, indicating the company captures significant profit from each dollar of revenue. The balance sheet is in fortress territory, with a conservative Debt/Equity ratio of just 0.32x and a Current Ratio of 2.61x, providing ample liquidity and financial flexibility. Free cash flow is a robust $5.12B in absolute terms, though the FCF yield is low at 1.1%, reflecting the premium market valuation of the stock. Overall, Applied Materials exhibits exceptional financial health, providing management with substantial capacity for dividends, share buybacks, and reinvestment in R&D without the risk of balance sheet stress.
- VALUATION — P/E ratio of 50.4x is significantly elevated versus the sector average of 22x, implying high expectations for future growth and making the stock vulnerable to multiple compression. - INSIDER ACTIVITY — Over the last 90 days, there have been 0 insider buys versus 9 insider sells, a net selling pattern that serves as a cautionary signal for existing shareholders. - VALUATION DIVERGENCE — The Python DCF estimate of $103.5 and the market price of $536.25 diverge massively, creating a deep uncertainty about the stock's intrinsic value anchor. - FCF / CASH BURN — While FCF is positive in absolute terms, the FCF yield of just 1.1% is extremely low, offering minimal cash return relative to the stock's current price. - 52-WEEK POSITION — The current price of $536.25 is 27.5% below the 52-week high of $739.67, indicating the stock has seen significant selling pressure over the past year.
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