Applied Materials Inc. (NASDAQ:AMAT)

Operating Cash Flow

The cash provided by operating activities shows a generally increasing trend from 2019 through 2024. Starting at $3,247 million in 2019, the figure rises to $3,804 million in 2020, then experiences a more pronounced increase to $5,442 million in 2021. The level remains relatively stable in 2022 with a slight dip to $5,399 million, followed by a significant jump to $8,700 million in 2023. The 2024 figure of $8,677 million stays close to the previous year’s level, indicating that the higher operating cash flow has been maintained.

Free Cash Flow to Equity (FCFE)

The FCFE also demonstrates a positive and steady upward trajectory over the six-year period. Beginning at $2,806 million in 2019, the values increase consistently each year. Notably, there is growth from $3,479 million in 2020 to $4,774 million in 2021, followed by a small decline to $4,612 million in 2022. A marked rise occurs in 2023 to $7,678 million, which is further increased to $8,080 million in 2024. This pattern mirrors the operating cash flow trend and suggests enhanced capacity for equity financing and shareholder returns.

Summary of Trends

Both cash provided by operating activities and FCFE have shown strong growth over the analyzed periods, with only minor fluctuations in 2022. The substantial increase from 2022 to 2023 in both measures suggests improvements in operational efficiency, profitability, or working capital management. The stabilization at high levels in 2024 reinforces the presence of sustained financial strength. This overall trend reflects a favorable liquidity position and a likely increase in capacity to fund expansion, pay dividends, or undertake share repurchases from internally generated cash flows.

The financial data over the analyzed periods shows significant growth in several key metrics, indicating evolving market perceptions and improving financial fundamentals.

Share Price

The share price exhibited a general upward trend from 59.87 US$ in 2019 to 169.35 US$ in 2024. Notably, there were periods of accelerated growth, such as the increase from 88.3 US$ in 2020 to 146.15 US$ in 2021, followed by a moderate decline to 104.73 US$ in 2022, before resuming its upward trajectory to reach the highest value in 2024.

Free Cash Flow to Equity (FCFE) per Share

FCFE per share increased steadily throughout the period, from 3.07 US$ in 2019 to 9.93 US$ in 2024. This consistent growth indicates improving cash generation capacity attributable to equity holders, with the most notable jump occurring between 2022 and 2023.

Price-to-FCFE (P/FCFE) Ratio

The P/FCFE ratio fluctuated over time but overall demonstrated a declining trend from 19.53 in 2019 to 17.05 in 2024 after peaking at 27.2 in 2021. The initial increase to a peak ratio in 2021 suggests the market valued the company's free cash flow at a higher premium, which then moderated in subsequent years. The declining ratio in the later years indicates a relatively more attractive valuation considering the growth in FCFE per share, possibly reflecting either improved fundamental performance or market adjustments.

In summary, the data shows a positive trajectory in share price and FCFE per share, accompanied by a moderating valuation ratio after an earlier peak. This pattern suggests enhanced operational performance and free cash flow generation, coupled with a market reassessment toward a more balanced valuation multiple over recent years.