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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 215.18-2.1%3:59 PM EST

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From: Mahmoud Mohammed3/6/2016 12:07:20 PM
of 275872
 
For the "Gambler" ... AMD Vs. Nvidia: Comparing Chip Makers in 2016

" ... Financial Performances

AMD's revenue declined by almost 40% from 2011 to 2015, while NVIDIA's revenue increased by more than 30% during the same period. Operating losses often come with declining revenue when fixed investment costs are not fully absorbed by smaller sums of revenue. Based on both companies' most recent quarterly financial performances, 2016's revenue and operating income trends will likely resemble those of 2015.

Valuation Outlook

Years of negative earnings have eroded AMD's total shareholders' equity from $1.59 billion at the end of 2011 to negative $412 million by the end of 2015. An equity deficit causes total liabilities to exceed total assets, which means shareholders would have lost all the value of their stakes if assets were liquidated at book value and the proceeds were not enough to cover all liabilities.

AMD's stock closed at $1.83 per share on Feb. 12, 2016, and has lost almost 80% of its value in the five years prior to 2016. The 2016 valuation outlook for AMD will remain bleak if the company's negative equity does not turn positive.

NVIDIA, on the other hand, ended 2015 with $4.42 billion in total shareholders' equity. The company has had positive retained earnings accumulations every year since 2011. Its stock was trending higher consistently during the three years prior to 2016. The company's valuation outlook should be positive, given its likely favorable business environment in 2016. The stock may achieve a higher valuation and trade above three times equity book value, which is the current price-book multiple, as of Feb. 12, 2016."


investopedia.com

Mahmoud
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