Applied Materials, Inc.'s (NASDAQ:AMAT) Fundamentals Look Pretty Strong: Could The Market Be Wrong About The Stock?

Simply Wall St.12-24 21:00

With its stock down 15% over the past three months, it is easy to disregard Applied Materials (NASDAQ:AMAT). However, stock prices are usually driven by a company’s financial performance over the long...

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However, stock prices are usually driven by a company’s financial performance over the long...</p>\n\n<a href=\"https://finance.yahoo.com/news/applied-materials-inc-nasdaq-amat-130011722.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4519","symbol_name":"光伏太阳能","start_time":0,"source_url":"https://finance.yahoo.com/news/applied-materials-inc-nasdaq-amat-130011722.html","article_id":"2493027089","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/hoFYS1bWPfkcr_Lk8hmHQw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/6082f0de8f524e9e1bc3e6a1a00ecc31"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2493027089","pubTimestamp":1735045211,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"With its stock down 15% over the past three months, it is easy to disregard Applied Materials . However, stock prices are usually driven by a company’s financial performance over the long term, which in this case looks quite promising. Specifically, we decided to study Applied Materials'  ROE in this article.Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company's success at turning shareholder investments into profits.Return on Equity = Net Profit  ÷ Shareholders' Equity. So, based on the above formula, the ROE for Applied Materials is:. Applied Materials has a low three-year median payout ratio of 15%, meaning that the company retains the remaining 85% of its profits. This suggests that the management is reinvesting most of the profits to grow the business.Besides, Applied Materials has been paying dividends for at least ten years or more. 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However, stock prices are usually driven by a company’s financial performance over the long term, which in this case looks quite promising. Specifically, we decided to study Applied Materials'  ROE in this article. \n Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company's success at turning shareholder investments into profits. \n See our latest analysis for Applied Materials \n How Do You Calculate Return On Equity? \n Return on equity can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Applied Materials is:\n38% = US$7.2b ÷ US$19b (Based on the trailing twelve months to October 2024).\n The 'return' is the income the business earned over the last year. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.38 in profit. \n Why Is ROE Important For Earnings Growth? \n We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or \"retain\", we are then able to evaluate a company's future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. \n Applied Materials' Earnings Growth And 38% ROE \n To begin with, Applied Materials has a pretty high ROE which is interesting. Additionally, the company's ROE is higher compared to the industry average of 11% which is quite remarkable. Probably as a result of this, Applied Materials was able to see a decent net income growth of 18% over the last five years. \n As a next step, we compared Applied Materials' net income growth with the industry and found that the company has a similar growth figure when compared with the industry average growth rate of 21% in the same period. \n\n\n\n  NasdaqGS:AMAT Past Earnings Growth December 24th 2024\n \n\n Earnings growth is a huge factor in stock valuation. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. This then helps them determine if the stock is placed for a bright or bleak future. Is AMAT fairly valued? This infographic on the company's intrinsic value  has everything you need to know. \n Is Applied Materials Making Efficient Use Of Its Profits? \n Applied Materials has a low three-year median payout ratio of 15%, meaning that the company retains the remaining 85% of its profits. This suggests that the management is reinvesting most of the profits to grow the business. \n Besides, Applied Materials has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Looking at the current analyst consensus data, we can see that the company's future payout ratio is expected to rise to 18% over the next three years. Despite the higher expected payout ratio, the company's ROE is not expected to change by much. \n Summary \n Overall, we are quite pleased with Applied Materials' performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. Having said that, the company's earnings growth is expected to slow down, as forecasted in the current analyst estimates. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2493027089"}