So 12.7 percent drop in the stock price within two weeks and change. That means we either have major cataclysmic, fundamental event that reduces the evaluation of company. That severely or somebody is misunderstanding, what the hell is going on, which creates an opportunity for us and in this video i'm gon na find out, which is which and what is what and let me give you a hint with the amd. I think it's the latter.

My name is tom nash and i quit my corporate job as a senior financial analyst to break down companies for you there's one thing you need to know about me: i don't take from anybody good morning allegedly squad. This is your friendly former senior financial analyst tom. If you've been following my channel, you know i'm a huge fan of amd company dropped from 86, like a stone all the way down to sim 5 13. Almost within just two weeks now that's unusual and when that happens, we got ta, take a look and see if it actually justifies, because if it's not there's only one conclusion, that means it is undervalued, which means we get to make some money.

However, before that, before everything else, i have to give my disclaimer: don't click nothing, don't smash, nothing don't subscribe to. Nothing, don't buy. Nothing. Just give me your attention for the next few minutes and i'm gon na blow you mind about amd and, as you know, when i can, i always give it a bottom line.

First, it's about 25 undervalued, maybe 22 undervalued. However, that's just the bottom line. If that's the only thing you needed from this video cyanide no hard feelings, however, if you want to see my analysis and me going through the numbers and showing you how to judge, if amd is right for you in this price action stick around, i think it's Going to be really interesting and the way we're going to do this due diligence, we're going to take a look at the margins, the ebitda, the gross profit. Then we're going to take a look at the growth current growth and future expected growth.

We're going to go over the financials and, of course, we're going to talk about the business outlook for the next five years, trying to gauge whether this company is actually undervalued, including using my methodology, which i showed you in a couple of videos back to actually calculate The multiplier to see what the true valuation of the company is in five minutes, so the first data point we have to take a look at is the gross profit and the ebitda. I want to see what their margins is like, because i want to see how good the business is, as you can see, seeking alpha greater than a plus, i'm not sure that's my grade, but i actually want to take a look at the actual numbers. So the gross profit margin for the trailing 12 months is 44.79, nothing to write home about it's actually decent. However, the ebitda margin is actually very impressive for a semiconductor company 19.3, which is actually much better than their competitors.

20 nearing twenty percent on ebitda. It's very impressive, however: what's even more impressive, the net income margin, which is 25, which is actually very nice, and now, let's move on to growth and we're going to use seeking alpha again because it's so damn convenient again. I wish i had an affiliate link anyways, as you can see here. We got revenue growth both year over year and forward, meaning current trailing 12 months and what we expected to do consensus-wise for the next 12 months.

So revenue growth for the past year was almost 58 hell. Impressive revenue growth for the future for the next year is about 35, which is still extremely impressive. Even the growth was 117 almost 180 wow. However, as you can see, it's about to tone down next year to 58 still extremely impressive.

Now these numbers are impressive, but wait. I want to show you something else. So the first thing we got to take a look at is revenues. We got ta, see if they're, fake or they're for real, because, where they're growing before covered the answer is yes, but not as much.

They went from 4 billion to 4.3 billion, 5.2 billion, 6.5 billion and then 6.7 billion, so on average they were growing nicely, but not as good as the past year. They went from 6.7 to 9.7 and again it's about to get toned down, but they definitely have the potential and the ability to create revenue. So if you take a look at the screen right now, you'll see that the past five years were not bad. The company went from 4 billion in 2015, all the way to 11.5 billion in the past five years, and the growth has been quite steady.

Of course, they had a little spike right here because of the covet numbers and, as you can see, it is about to get toned down. However, the company has been generating. Cash flow has been generating revenues, and i have been growing quite nicely. What i also like to see is r d expenses, and you can see right here: they're increasing it every year.

That's a good sign! That's the sign of a company! That's trying to innovate! 1.4 billion 1.5 billion 2 billion 2.1 billion. As you can see right here, r d expenses are going up. That means they're growing they're trying to get better. That's a great sign for me now.

Let's take a look at the balance sheet and we can see right here. They have 1.7 billion in cash right now, which gives them a lot of security. It's a nice little blanket to cover yourself in the winter, and now i want you to see something extremely impressive. The company has 10 billion in total assets.

If you eliminate the 300 million that they have in goodwill, which is total trash, it's still 9.7 billion. Now, if you take a look at the total liabilities of the company, which is 3.5 billion, you get a nice two and a half multiplier between the liabilities and the assets, which is extremely impressive. Especially, they only have about 300 million in debt, which means literally, they have no debt, know that with that ratio, that means these guys know what they're doing that's very impressive, and now i want you and now i want you to take a look at this little Cliff note i made so we can actually go through this together because it's going to make things easier, as you can see on the screen right now, i've prepared an executive summary, so the stock is down from 86 on april 28 to 75 on may 14.. So 12.7 percent drop in the stock price within two weeks and change.

That means we either have major cataclysmic, fundamental event that reduces the valuation of the company. That severely or somebody is misunderstanding, what the hell is going on, which creates an opportunity for us and in this video i'm gon na find out, which is which and what is what and let me give you a hint with the amd. I think it's, the latter. Everything you say here is just my opinion.

Chill it might be, a hacker might be wrong, it might be the ramblings of a man. You got to do your own research, you got to find out for yourself, allegedly blah blah mother effing blah now check this out. So, let's talk about the drop catalyst, what made the stock drop so severely now i think what happened is that the high inflation numbers for april, which were 4.2, which is literally double in the anticipated numbers and the highest we had in the last decade and so Pulled all the tech stocks down and why do inflation numbers actually pull companies down? Well, in the case of tech companies - and i'm not talking about amd here - and i explain why a lot of tech companies get involved in this because they have future upside companies like tesla biotech companies. A lot of companies have major upside in the future.

So when you have high inflation, that means that you anticipate that the federal reserve will increase interest rates to battle that inflation. Now, when you increase interest rates, you pull the future valuations all the way down, because the discount rate is pretty much that interest so as high as you go with the interest rates, the low as you go as far as the valuation of future cash flows. So when you have a company that has most of it absolutely in the future, it's going to get hit by inflation. It's quite simple, however: here's the 88 billion dollar question does amd fall into this category.

The answer is clearly: no, it's a cash flow positive. It's a blue chip stock and they have a leading product in the category which is the ryzen and just one look at their financials shows you that i'm not even talking about the fact that they grew their revenue by 93 year. Over year they generated 3.4 billion q1 financials. I mean this is a cash flow positive company in the billions.

However, now we're getting to the interesting part. So how much does it actually worth? What's the real valuation, because if you look at the multiples, it seems quite expensive, at least when you compare to the competitors right, their multiples are very high. If it be the iv to sales, they seem very, very high. So you might think this company is overvalued.

Already, even at 75 and in this video, i'm about to show you why this isn't necessarily the case and for decency and actual transparency. I'm going to give you the bear case as well to show you why it may not be, and for that we got to understand the future catalyst how much the company still has in the tank as far as future growth, because as you're about to see in A second that percentage of future growth is critical to answer my question: is the company over or undervalued so bear with me for a few seconds and then you'll see why i'm showing you this so 61 revenues came from graphics and computing. Essentially, that's rising right. 2.1 billion out of 3.4 46 year-over-year growth.

Very nice, however, check this out. Enterprise server segment grew by 290. I don't know why. I had this german accent.

This is the fastest growing amd segment right now, they're holding about 10 of the server market. 10. Imagine if they go to 20, just imagine what it's going to do to the company. Now, i'm not saying that they will or they want, but it seems that they're doing it.

They just grew it by 300 in a single year, which is hell impressive. Now, how do we go from that to actually valuing if 75 dollars is a legitimate price for the company? Not let me show you. I prepared this in advance, so i ran my own little excel spreadsheet. As you remember, i put out a video a few days ago, showing you this little hack of how to evaluate companies on this quick little five minute tool.

So what i did here is i took their current ebitda and i've added a growth rate right here: 20. Year-Over-Year growth, 25 year-over-year growth, 30 year-over-year growth for the next five years, a flat line growth, nothing exponential right also. What we have here is a 17.3 multiplier, because this is the semiconductor business and not a tech, tech company, and this is what we got so just to give you the bottom line without all the mumbo jumbo, if the growth rate is 20 for the next five Years on average, the company is overvalued straight up if they can't grow over 20 on average year over year for the next five years. They are overvalued by 25.

I said it: oh, my god. The sky have fallen, i'm not about here to lick butt to any company, i'm just saying if they can't make 20 they're overvalued. Now here's the break-even point if they grow on 25 year-over-year for the next five years on average they're right on the dot. It means they're, two percent undivided pretty much meaning break even now, if they grow 30 and above that's the spot, when you can actually see under valuation because 30 growth year-over-year on average for the next five years gives me 22.4 under valuation.

Now you can just do the math 35. 40. 45. 50.

Whatever it is, you see as growth rate for this company, but all i'm saying here if this company, based on what we saw, can grow at a faster than 30 year-over-year growth for the next five years. This company is undervalued. Now the question is: can it i think it can, based on the server dominance that actually presenting right now, 290 year-over-year growth based on ryzen being dominant, definitely leading in the category? I think they can do it. However, you got to do your research, as i said, because, allegedly this is just my opinion, as always huge thanks to the channel members and the patrons, let me know below if you enjoyed this type of video.

Thank you. So much we'll see you guys. Next video.