Stock Analysis on Net

Advanced Micro Devices Inc. (NASDAQ:AMD) 

Economic Value Added (EVA)

Microsoft Excel

Economic Profit

Advanced Micro Devices Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 30, 2023 Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019
Net operating profit after taxes (NOPAT)1 (201) (138) 3,517 1,330 409
Cost of capital2 19.22% 19.05% 19.32% 19.29% 18.94%
Invested capital3 57,883 58,525 6,195 4,364 3,408
 
Economic profit4 (11,327) (11,285) 2,320 488 (236)

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -20119.22% × 57,883 = -11,327

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Advanced Micro Devices Inc. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Net Operating Profit after Taxes (NOPAT)

Advanced Micro Devices Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 30, 2023 Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019
Net income 854 1,320 3,162 2,490 341
Deferred income tax expense (benefit)1 (1,019) (1,505) 308 (1,223) (7)
Increase (decrease) in liability for product warranty2 20 14 14 22 2
Increase (decrease) in equity equivalents3 (999) (1,491) 322 (1,201) (5)
Interest expense 106 88 34 47 94
Interest expense, operating lease liability4 29 19 16 13 13
Adjusted interest expense 135 107 50 60 107
Tax benefit of interest expense5 (28) (22) (10) (13) (23)
Adjusted interest expense, after taxes6 107 84 39 47 85
Interest income (206) (65) (8) (8) (15)
Investment income, before taxes (206) (65) (8) (8) (15)
Tax expense (benefit) of investment income7 43 14 2 2 3
Investment income, after taxes8 (163) (51) (6) (6) (12)
Net operating profit after taxes (NOPAT) (201) (138) 3,517 1,330 409

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in liability for product warranty.

3 Addition of increase (decrease) in equity equivalents to net income.

4 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 641 × 4.57% = 29

5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 135 × 21.00% = 28

6 Addition of after taxes interest expense to net income.

7 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 206 × 21.00% = 43

8 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Advanced Micro Devices Inc. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Cash Operating Taxes

Advanced Micro Devices Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 30, 2023 Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019
Income tax provision (benefit) (346) (122) 513 (1,210) 31
Less: Deferred income tax expense (benefit) (1,019) (1,505) 308 (1,223) (7)
Add: Tax savings from interest expense 28 22 10 13 23
Less: Tax imposed on investment income 43 14 2 2 3
Cash operating taxes 658 1,392 214 24 57

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Advanced Micro Devices Inc. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Invested Capital

Advanced Micro Devices Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 30, 2023 Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019
Current portion of long-term debt, net 751 312
Long-term debt, net of current portion 1,717 2,467 1 330 486
Operating lease liability1 641 489 419 242 242
Total reported debt & leases 3,109 2,956 732 572 728
Stockholders’ equity 55,892 54,750 7,497 5,837 2,827
Net deferred tax (assets) liabilities2 836 1,876 (919) (1,234) (11)
Liability for product warranty3 85 65 51 37 15
Equity equivalents4 921 1,941 (868) (1,197) 4
Accumulated other comprehensive (income) loss, net of tax5 10 41 3 (17)
Adjusted stockholders’ equity 56,823 56,732 6,632 4,623 2,831
Construction in progress6 (209) (143) (96) (136) (114)
Short-term investments7 (1,840) (1,020) (1,073) (695) (37)
Invested capital 57,883 58,525 6,195 4,364 3,408

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of liability for product warranty.

4 Addition of equity equivalents to stockholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of construction in progress.

7 Subtraction of short-term investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Advanced Micro Devices Inc. invested capital increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Cost of Capital

Advanced Micro Devices Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 270,951 270,951 ÷ 273,963 = 0.99 0.99 × 19.40% = 19.19%
Debt3 2,371 2,371 ÷ 273,963 = 0.01 0.01 × 3.26% × (1 – 21.00%) = 0.02%
Operating lease liability4 641 641 ÷ 273,963 = 0.00 0.00 × 4.57% × (1 – 21.00%) = 0.01%
Total: 273,963 1.00 19.22%

Based on: 10-K (reporting date: 2023-12-30).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 126,929 126,929 ÷ 129,699 = 0.98 0.98 × 19.40% = 18.99%
Debt3 2,281 2,281 ÷ 129,699 = 0.02 0.02 × 3.26% × (1 – 21.00%) = 0.05%
Operating lease liability4 489 489 ÷ 129,699 = 0.00 0.00 × 3.83% × (1 – 21.00%) = 0.01%
Total: 129,699 1.00 19.05%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 144,012 144,012 ÷ 144,772 = 0.99 0.99 × 19.40% = 19.30%
Debt3 341 341 ÷ 144,772 = 0.00 0.00 × 7.50% × (1 – 21.00%) = 0.01%
Operating lease liability4 419 419 ÷ 144,772 = 0.00 0.00 × 3.70% × (1 – 21.00%) = 0.01%
Total: 144,772 1.00 19.32%

Based on: 10-K (reporting date: 2021-12-25).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 103,734 103,734 ÷ 104,618 = 0.99 0.99 × 19.40% = 19.24%
Debt3 642 642 ÷ 104,618 = 0.01 0.01 × 7.54% × (1 – 21.00%) = 0.04%
Operating lease liability4 242 242 ÷ 104,618 = 0.00 0.00 × 5.29% × (1 – 21.00%) = 0.01%
Total: 104,618 1.00 19.29%

Based on: 10-K (reporting date: 2020-12-26).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 57,840 57,840 ÷ 59,905 = 0.97 0.97 × 19.40% = 18.73%
Debt3 1,823 1,823 ÷ 59,905 = 0.03 0.03 × 7.68% × (1 – 21.00%) = 0.18%
Operating lease liability4 242 242 ÷ 59,905 = 0.00 0.00 × 5.55% × (1 – 21.00%) = 0.02%
Total: 59,905 1.00 18.94%

Based on: 10-K (reporting date: 2019-12-28).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Advanced Micro Devices Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 30, 2023 Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019
Selected Financial Data (US$ in millions)
Economic profit1 (11,327) (11,285) 2,320 488 (236)
Invested capital2 57,883 58,525 6,195 4,364 3,408
Performance Ratio
Economic spread ratio3 -19.57% -19.28% 37.44% 11.19% -6.94%
Benchmarks
Economic Spread Ratio, Competitors4
Analog Devices Inc. -7.01% -8.37% -11.64% -6.69% -5.15%
Applied Materials Inc. 18.75% 28.62% 24.14% 12.32% 11.95%
Broadcom Inc. 9.50% 7.93% -1.44% -6.99% -6.69%
Enphase Energy Inc. 23.11% 27.70% 15.87% -3.22% 14.18%
Intel Corp. -13.36% -6.93% 10.26% 15.93% 14.01%
KLA Corp. 25.01% 27.26% 15.92% 4.77% 6.27%
Lam Research Corp. 11.27% 25.88% 25.34% 8.35% 4.90%
Micron Technology Inc. -25.69% 2.15% -2.38% -7.98% 2.20%
NVIDIA Corp. -9.28% 32.92% 13.35% -0.65% 59.95%
ON Semiconductor Corp. 0.05% 1.95% -2.39% -13.68% -10.17%
Qualcomm Inc. 3.55% 29.99% 27.40% 12.44% 13.84%
Texas Instruments Inc. 15.62% 36.29% 34.90% 30.05% 29.73%

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -11,327 ÷ 57,883 = -19.57%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Advanced Micro Devices Inc. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Economic Profit Margin

Advanced Micro Devices Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 30, 2023 Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019
Selected Financial Data (US$ in millions)
Economic profit1 (11,327) (11,285) 2,320 488 (236)
Net revenue 22,680 23,601 16,434 9,763 6,731
Performance Ratio
Economic profit margin2 -49.94% -47.81% 14.11% 5.00% -3.51%
Benchmarks
Economic Profit Margin, Competitors3
Analog Devices Inc. -25.16% -31.36% -74.77% -21.74% -15.78%
Applied Materials Inc. 12.57% 16.53% 15.40% 9.38% 8.29%
Broadcom Inc. 16.63% 14.84% -3.40% -19.29% -17.76%
Enphase Energy Inc. 12.51% 14.51% 8.48% -4.01% 10.77%
Intel Corp. -22.68% -9.74% 11.50% 16.77% 15.70%
KLA Corp. 19.87% 23.05% 15.69% 5.35% 8.76%
Lam Research Corp. 9.81% 18.77% 18.09% 8.18% 4.28%
Micron Technology Inc. -88.37% 3.68% -3.99% -15.75% 3.64%
NVIDIA Corp. -7.34% 22.07% 10.44% -0.84% 24.47%
ON Semiconductor Corp. 0.07% 2.19% -2.68% -17.93% -12.64%
Qualcomm Inc. 3.12% 19.98% 16.50% 9.39% 12.22%
Texas Instruments Inc. 20.15% 31.82% 31.22% 26.94% 24.92%

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × -11,327 ÷ 22,680 = -49.94%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Advanced Micro Devices Inc. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.