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.
This stock has been pounded in the recent months, loosing almost 10% of value in a single day! I know, impressive. But why? What happened with the company? Long story short they provided guidance for the next quarter below expectations. That's it? Yeah, Wall Street has overreacted AGAIN!
AMAT has been an impressive stock the past 5 years increasing its EPS from $.21 in 2013 to $3.2 in 2017! That's impressive but there is more. Its net margin has risen from 3.41% to 23.59% in the same period! Again, impressive! So what is the downside? As you see AMAT operates in a cyclical business and there are analysts that think that this cycle is about to end.
So... what about valuation? Well, applying the Ben Graham Formula we obtain an intrinsic value of $101, if we apply a 50% Margin of Safety we get an estimated value of $50.5. So this stock is extremely undervalued.
What are your opinions on AMAT?
Don't take this as investment advice, do your own research.