Stock Analysis on Net

Advanced Micro Devices Inc. (NASDAQ:AMD) 

Economic Value Added (EVA)

Microsoft Excel LibreOffice Calc

Economic Profit

Advanced Micro Devices Inc., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018 Dec 30, 2017
Net operating profit after taxes (NOPAT)1 3,517  1,330  409  430  114 
Cost of capital2 21.89% 21.84% 21.43% 20.25% 19.19%
Invested capital3 6,195  4,364  3,408  2,619  2,145 
 
Economic profit4 2,161  377  (321) (101) (297)

Based on: 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,51721.89% × 6,195 = 2,161

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 increased from 2019 to 2020 and from 2020 to 2021.

Net Operating Profit after Taxes (NOPAT)

Advanced Micro Devices Inc., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018 Dec 30, 2017
Net income 3,162  2,490  341  337  43 
Deferred income tax expense (benefit)1 308  (1,223) (7) (4) (16)
Increase (decrease) in liability for product warranty2 14  22  — 
Increase (decrease) in equity equivalents3 322  (1,201) (5) (3) (16)
Interest expense 34  47  94  121  126 
Interest expense, operating lease liability4 16  13  13  18  14 
Adjusted interest expense 50  60  107  139  140 
Tax benefit of interest expense5 (10) (13) (23) (29) (49)
Adjusted interest expense, after taxes6 39  47  85  110  91 
Interest income (8) (8) (15) (18) (6)
Investment income, before taxes (8) (8) (15) (18) (6)
Tax expense (benefit) of investment income7
Investment income, after taxes8 (6) (6) (12) (14) (4)
Net operating profit after taxes (NOPAT) 3,517  1,330  409  430  114 

Based on: 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30).

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 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 419 × 3.70% = 16

5 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 50 × 21.00% = 10

6 Addition of after taxes interest expense to net income.

7 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 8 × 21.00% = 2

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 increased from 2019 to 2020 and from 2020 to 2021.

Cash Operating Taxes

Advanced Micro Devices Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018 Dec 30, 2017
Income tax provision (benefit) 513  (1,210) 31  (9) 19 
Less: Deferred income tax expense (benefit) 308  (1,223) (7) (4) (16)
Add: Tax savings from interest expense 10  13  23  29  49 
Less: Tax imposed on investment income
Cash operating taxes 214  24  57  20  82 

Based on: 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30).

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 decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Invested Capital

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

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018 Dec 30, 2017
Short-term debt, net —  —  —  136  70 
Current portion of long-term debt, net 312  —  —  —  — 
Long-term debt, net of current portion 330  486  1,114  1,325 
Operating lease liability1 419  242  242  242  189 
Total reported debt & leases 732  572  728  1,492  1,584 
Stockholders’ equity 7,497  5,837  2,827  1,266  611 
Net deferred tax (assets) liabilities2 (919) (1,234) (11) (4) — 
Liability for product warranty3 51  37  15  13  12 
Equity equivalents4 (868) (1,197) 12 
Accumulated other comprehensive (income) loss, net of tax5 (17) —  (6)
Adjusted stockholders’ equity 6,632  4,623  2,831  1,283  617 
Construction in progress6 (96) (136) (114) (78) (56)
Short-term investments7 (1,073) (695) (37) (78) — 
Invested capital 6,195  4,364  3,408  2,619  2,145 

Based on: 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30).

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 2019 to 2020 and from 2020 to 2021.

Cost of Capital

Advanced Micro Devices Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 144,012  144,012  ÷ 144,772  = 0.99 0.99 × 21.98% = 21.87%
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 21.89%

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 × 21.98% = 21.80%
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 21.84%

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 × 21.98% = 21.22%
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 21.43%

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 »

Capital (fair value)1 Weights Cost of capital
Equity2 23,172  23,172  ÷ 25,978  = 0.89 0.89 × 21.98% = 19.61%
Debt3 2,564  2,564  ÷ 25,978  = 0.10 0.10 × 7.58% × (1 – 21.00%) = 0.59%
Operating lease liability4 242  242  ÷ 25,978  = 0.01 0.01 × 7.58% × (1 – 21.00%) = 0.06%
Total: 25,978  1.00 20.25%

Based on: 10-K (reporting date: 2018-12-29).

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 12,143  12,143  ÷ 14,506  = 0.84 0.84 × 21.98% = 18.40%
Debt3 2,174  2,174  ÷ 14,506  = 0.15 0.15 × 7.48% × (1 – 35.00%) = 0.73%
Operating lease liability4 189  189  ÷ 14,506  = 0.01 0.01 × 7.48% × (1 – 35.00%) = 0.06%
Total: 14,506  1.00 19.19%

Based on: 10-K (reporting date: 2017-12-30).

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 LibreOffice Calc
Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018 Dec 30, 2017
Selected Financial Data (US$ in millions)
Economic profit1 2,161  377  (321) (101) (297)
Invested capital2 6,195  4,364  3,408  2,619  2,145 
Performance Ratio
Economic spread ratio3 34.88% 8.63% -9.42% -3.84% -13.87%
Benchmarks
Economic Spread Ratio, Competitors4
Analog Devices Inc. -11.83% -6.87% -5.33% -8.10% -12.21%
Applied Materials Inc. 25.52% 13.52% 13.12% 21.15% 16.13%
Broadcom Inc. -0.26% -5.89% -5.60% -1.28% -7.80%
Intel Corp. 14.76% 20.54% 18.91% 16.12% 2.46%
Lam Research Corp. 26.11% 9.08% 5.59% 10.78% 17.48%
Micron Technology Inc. -2.05% -7.66% 2.52% 25.11% 5.83%
NVIDIA Corp. 16.20% 2.24% 62.65% 24.04% 24.65%
Qualcomm Inc. 27.51% 12.55% 13.94% -30.73% -11.23%
Texas Instruments Inc. 36.45% 31.60% 31.28% 32.78% 20.36%

Based on: 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30).

1 Economic profit. See details »

2 Invested capital. See details »

3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,161 ÷ 6,195 = 34.88%

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 improved from 2019 to 2020 and from 2020 to 2021.

Economic Profit Margin

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

Microsoft Excel LibreOffice Calc
Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018 Dec 30, 2017
Selected Financial Data (US$ in millions)
Economic profit1 2,161  377  (321) (101) (297)
Net revenue 16,434  9,763  6,731  6,475  5,329 
Performance Ratio
Economic profit margin2 13.15% 3.86% -4.77% -1.55% -5.58%
Benchmarks
Economic Profit Margin, Competitors3
Analog Devices Inc. -76.01% -22.34% -16.33% -24.34% -47.55%
Applied Materials Inc. 16.29% 10.29% 9.10% 12.49% 12.42%
Broadcom Inc. -0.61% -16.26% -14.89% -2.74% -22.57%
Intel Corp. 16.53% 21.62% 21.18% 17.13% 2.63%
Lam Research Corp. 18.64% 8.89% 4.88% 9.38% 15.14%
Micron Technology Inc. -3.44% -15.12% 4.17% 29.26% 8.19%
NVIDIA Corp. 12.67% 2.90% 25.58% 15.99% 14.41%
Qualcomm Inc. 16.57% 9.47% 12.31% -25.42% -25.05%
Texas Instruments Inc. 32.60% 28.33% 26.22% 25.99% 16.13%

Based on: 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30).

1 Economic profit. See details »

2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × 2,161 ÷ 16,434 = 13.15%

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 improved from 2019 to 2020 and from 2020 to 2021.