Will Big Technology Perform or Crash on Earnings?
Advanced Micro Devices(AMD)
Who They Are: AMD trades an average of 19.2 million shares per day with a marketcap of $3.4 Billion.
52-Week High: $8.25
52-Week Low: $4.53
Book Value: $1.50
Float Short: 14.71%
Price To Book: 3.25
AMD is expected to report weak second-quarter earnings after the market closes on July 19. The consensus estimate is currently 8 cents a share, down a penny (11.1%) from 9 cents in the same period last year. Anyone who has looked at an AMD chart recently knows much of the loss is from July 9, when the company said the earnings release will look bleak.
The trailing 12-month price-to-earnings ratio is 8.9 and the mean fiscal-year estimated P/E is 9.21, based on earnings of 53 cents a share this year. With Intel(INTC) and Nvidia(NVDA) gaining market share at AMD's expense, 53 cents a share may be optimistic.
AMD beat estimates in the last four quarters, but there is no reason to believe it will again after its earnings warning a few days ago.
Management has predicted an improvement in year-over-year revenue. Revenue was $6.49 billion last fiscal year, compared to $5.40 billion the previous year. The bottom line shows rising earnings year-over-year of $471 million last fiscal year, compared to $376 million the previous year.
AMD last released earnings on April 19, and the closing price before then was $7.97. Since then, its shares have fallen nearly 39%, with a 15% drop this month alone. AMD has reached oversold status on my charts, and I will look for put options to sell in front of earnings to capture premium and expected price appreciation.