Applied Materials (AMAT) & The Competition Critical Review

Applied Materials (NASDAQ: AMAT) is one of 122 public companies in the “Semiconductors & related devices” industry, but how does it contrast to its peers? We will compare Applied Materials to related businesses based on the strength of its earnings, dividends, institutional ownership, valuation, risk, profitability and analyst recommendations.

Institutional and Insider Ownership

75.5% of Applied Materials shares are owned by institutional investors. Comparatively, 60.2% of shares of all “Semiconductors & related devices” companies are owned by institutional investors. 0.4% of Applied Materials shares are owned by insiders. Comparatively, 9.7% of shares of all “Semiconductors & related devices” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Applied Materials has a beta of 1.65, meaning that its share price is 65% more volatile than the S&P 500. Comparatively, Applied Materials’ peers have a beta of 1.09, meaning that their average share price is 9% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Applied Materials and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Materials 0 3 19 1 2.91
Applied Materials Competitors 1501 5746 10934 619 2.57

Applied Materials currently has a consensus target price of $64.83, indicating a potential upside of 27.48%. As a group, “Semiconductors & related devices” companies have a potential upside of 11.32%. Given Applied Materials’ stronger consensus rating and higher probable upside, equities analysts clearly believe Applied Materials is more favorable than its peers.

Earnings & Valuation

This table compares Applied Materials and its peers top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Applied Materials $14.54 billion $3.43 billion 15.65
Applied Materials Competitors $3.01 billion $450.98 million 25.02

Applied Materials has higher revenue and earnings than its peers. Applied Materials is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

Applied Materials pays an annual dividend of $0.80 per share and has a dividend yield of 1.6%. Applied Materials pays out 24.6% of its earnings in the form of a dividend. As a group, “Semiconductors & related devices” companies pay a dividend yield of 1.7% and pay out 43.9% of their earnings in the form of a dividend.

Profitability

This table compares Applied Materials and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Materials 19.24% 51.65% 22.65%
Applied Materials Competitors -38.01% 4.21% 3.12%

Summary

Applied Materials beats its peers on 12 of the 15 factors compared.

About Applied Materials

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, display, and related industries worldwide. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. It offers products and technologies for transistor and interconnect fabrication, including epitaxy, ion implantation, oxidation and nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including 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, personal computers, electronic tablets, smart phones, and other consumer-oriented devices, as well as equipment for flexible substrates. The company serves manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode displays, and other electronic devices. Applied Materials, Inc. was founded in 1967 and is headquartered in Santa Clara, California.

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