2. Applied Materials Inc.
  3. Common Stock Valuation Ratios
 

Applied Materials Inc. (AMAT)

Common Stock Valuation Ratios (Price Multiples)

Difficulty: Beginner

Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).

Current Valuation Ratios

Applied Materials Inc., current price multiples

 
Applied Materials Inc. Apple Inc. Broadcom Inc. Cisco Systems Inc. HP Inc. Intel Corp. NVIDIA Corp. Qualcomm Inc. Texas Instruments Inc. Technology Hardware & Equipment Technology
Selected Financial Data
Current share price (P) $ 47.96
No. shares of common stock outstanding 1,008,047,762
Growth rate (g) -2.59%
 
Earnings per share (EPS) $ 3.41
Next year expected EPS $ 3.32
Operating profit per share $ 3.84
Sales per share $ 14.42
Book value per share (BVPS) $ 9.27
Ratios (Price Multiples)
Price to earnings (P/E) 14.08 18.80 66.26 21.14 15.17 25.48 49.99 35.17 29.88 22.94 30.65
Price to next year expected earnings 14.45 14.87 62.83 19.36 12.94 23.29 43.93 31.82 26.10 19.74 26.56
Price to operating profit (P/OP) 12.50 14.82 47.05 16.97 10.89 13.64 47.45 33.18 18.08 17.06 22.17
Price to sales (P/S) 3.33 3.96 6.36 4.23 0.74 3.90 15.68 3.89 7.35 4.07 5.45
Price to book value (P/BV) 5.17 6.78 5.53 3.07 – 3.54 20.39 2.82 10.64 5.56 6.30

If company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.

Otherwise, if company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.

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Historical Valuation Ratios (Summary)

Applied Materials Inc., historical price multiples

 
Oct 29, 2017 Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013 Oct 28, 2012
Price to earnings (P/E) 16.16 20.68 15.88 27.87 78.13 118.67
Price to operating profit (P/OP) 14.35 16.54 12.92 19.66 46.30 31.47
Price to sales (P/S) 3.82 3.29 2.26 3.29 2.66 1.48
Price to book value (P/BV) 5.94 4.93 2.87 3.80 2.82 1.79
Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Applied Materials Inc.'s P/E ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Applied Materials Inc.'s P/OP ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Applied Materials Inc.'s P/S ratio increased from 2015 to 2016 and from 2016 to 2017.
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company's required rate of return and its actual rate of return. Applied Materials Inc.'s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Earnings (P/E)

Applied Materials Inc., historical P/E calculation, comparison to benchmarks

 
Oct 29, 2017 Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013 Oct 28, 2012
No. shares of common stock outstanding1 1,056,340,714 1,076,570,134 1,149,133,389 1,221,471,983 1,204,183,467 1,197,659,704
Selected Financial Data (USD $)
Net income (in millions) 3,434  1,721  1,377  1,072  256  109 
Earnings per share (EPS)3 3.25 1.60 1.20 0.88 0.21 0.09
Share price1, 2 52.54 33.06 19.03 24.46 16.61 10.80
Ratio
P/E ratio4 16.16 20.68 15.88 27.87 78.13 118.67
Benchmarks
P/E Ratio, Competitors
Apple Inc. 18.32 13.49 12.45 15.60 12.75 13.42
Broadcom Inc. 63.27 – 28.48 98.34 23.29 13.96
Cisco Systems Inc. 16.37 14.69 14.82 16.14 12.98 12.55
HP Inc. 13.51 10.60 4.82 14.57 10.48 –
Intel Corp. 22.15 16.72 11.85 13.90 12.80 –
NVIDIA Corp. 36.34 28.97 19.77 22.35 13.95 –
Qualcomm Inc. 31.96 17.37 17.18 16.11 17.19 16.21
Texas Instruments Inc. 27.77 21.45 17.66 21.89 22.29 –
P/E Ratio, Sector
Technology Hardware & Equipment 20.40 16.12 13.02 16.11 13.66 –
P/E Ratio, Industry
Technology 27.19 20.90 18.72 18.58 16.17 –

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Applied Materials Inc.'s Annual Report.

2017 Calculations

3 EPS = Net income ÷ No. shares of common stock outstanding
= 3,434,000,000 ÷ 1,056,340,714 = 3.25

4 P/E ratio = Share price ÷ EPS
= 52.54 ÷ 3.25 = 16.16

Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Applied Materials Inc.'s P/E ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.

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Price to Operating Profit (P/OP)

Applied Materials Inc., historical P/OP calculation, comparison to benchmarks

 
Oct 29, 2017 Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013 Oct 28, 2012
No. shares of common stock outstanding1 1,056,340,714 1,076,570,134 1,149,133,389 1,221,471,983 1,204,183,467 1,197,659,704
Selected Financial Data (USD $)
Income from operations (in millions) 3,868  2,152  1,693  1,520  432  411 
Operating profit per share3 3.66 2.00 1.47 1.24 0.36 0.34
Share price1, 2 52.54 33.06 19.03 24.46 16.61 10.80
Ratio
P/OP ratio4 14.35 16.54 12.92 19.66 46.30 31.47
Benchmarks
P/OP Ratio, Competitors
Apple Inc. 14.44 10.27 9.34 11.74 9.64 10.14
Broadcom Inc. 44.93 – 23.80 59.05 23.29 13.51
Cisco Systems Inc. 13.14 12.46 12.36 13.57 11.57 10.03
HP Inc. 9.70 7.45 4.02 10.16 7.51 –
Intel Corp. 11.86 13.40 9.66 10.60 10.02 –
NVIDIA Corp. 31.30 23.81 16.42 19.81 12.11 –
Qualcomm Inc. 30.15 15.26 15.68 17.00 16.30 17.43
Texas Instruments Inc. 16.81 16.07 12.34 15.64 17.02 –
P/OP Ratio, Sector
Technology Hardware & Equipment 15.17 12.39 10.14 12.56 10.79 –
P/OP Ratio, Industry
Technology 19.67 16.53 14.33 14.28 12.96 –

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Applied Materials Inc.'s Annual Report.

2017 Calculations

3 Operating profit per share = Income from operations ÷ No. shares of common stock outstanding
= 3,868,000,000 ÷ 1,056,340,714 = 3.66

4 P/OP ratio = Share price ÷ Operating profit per share
= 52.54 ÷ 3.66 = 14.35

Ratio Description The company
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Applied Materials Inc.'s P/OP ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.

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Price to Sales (P/S)

Applied Materials Inc., historical P/S calculation, comparison to benchmarks

 
Oct 29, 2017 Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013 Oct 28, 2012
No. shares of common stock outstanding1 1,056,340,714 1,076,570,134 1,149,133,389 1,221,471,983 1,204,183,467 1,197,659,704
Selected Financial Data (USD $)
Net sales (in millions) 14,537  10,825  9,659  9,072  7,509  8,719 
Sales per share3 13.76 10.06 8.41 7.43 6.24 7.28
Share price1, 2 52.54 33.06 19.03 24.46 16.61 10.80
Ratio
P/S ratio4 3.82 3.29 2.26 3.29 2.66 1.48
Benchmarks
P/S Ratio, Competitors
Apple Inc. 3.86 2.86 2.85 3.37 2.76 3.58
Broadcom Inc. 6.07 5.48 5.69 6.06 5.10 3.33
Cisco Systems Inc. 3.28 3.20 2.71 2.69 2.66 2.19
HP Inc. 0.66 0.55 0.21 0.66 0.48 0.23
Intel Corp. 3.39 2.90 2.44 2.91 2.34 –
NVIDIA Corp. 8.76 3.55 2.66 2.38 1.83 –
Qualcomm Inc. 3.54 4.21 3.58 4.85 4.74 5.18
Texas Instruments Inc. 6.83 5.77 4.06 4.73 3.95 –
P/S Ratio, Sector
Technology Hardware & Equipment 3.62 2.91 2.34 2.72 2.26 –
P/S Ratio, Industry
Technology 4.83 4.00 3.32 3.41 3.03 –

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Applied Materials Inc.'s Annual Report.

2017 Calculations

3 Sales per share = Net sales ÷ No. shares of common stock outstanding
= 14,537,000,000 ÷ 1,056,340,714 = 13.76

4 P/S ratio = Share price ÷ Sales per share
= 52.54 ÷ 13.76 = 3.82

Ratio Description The company
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Applied Materials Inc.'s P/S ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Book Value (P/BV)

Applied Materials Inc., historical P/BV calculation, comparison to benchmarks

 
Oct 29, 2017 Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013 Oct 28, 2012
No. shares of common stock outstanding1 1,056,340,714 1,076,570,134 1,149,133,389 1,221,471,983 1,204,183,467 1,197,659,704
Selected Financial Data (USD $)
Stockholders’ equity (in millions) 9,349  7,217  7,613  7,868  7,088  7,235 
Book value per share (BVPS)3 8.85 6.70 6.62 6.44 5.89 6.04
Share price1, 2 52.54 33.06 19.03 24.46 16.61 10.80
Ratio
P/BV ratio4 5.94 4.93 2.87 3.80 2.82 1.79
Benchmarks
P/BV Ratio, Competitors
Apple Inc. 6.61 4.81 5.57 5.53 3.82 4.74
Broadcom Inc. 5.28 3.84 8.24 7.97 4.45 3.25
Cisco Systems Inc. 2.38 2.48 2.23 2.24 2.19 1.97
HP Inc. – – 0.79 2.73 1.96 1.22
Intel Corp. 3.08 2.60 2.21 2.91 2.11 –
NVIDIA Corp. 10.51 3.98 2.82 2.21 1.63 –
Qualcomm Inc. 2.56 3.12 2.88 3.28 3.26 2.95
Texas Instruments Inc. 9.89 7.36 5.30 5.94 4.46 –
P/BV Ratio, Sector
Technology Hardware & Equipment 4.95 3.90 3.59 3.91 2.99 –
P/BV Ratio, Industry
Technology 5.59 4.57 4.22 4.20 3.74 –

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Applied Materials Inc.'s Annual Report.

2017 Calculations

3 BVPS = Stockholders’ equity ÷ No. shares of common stock outstanding
= 9,349,000,000 ÷ 1,056,340,714 = 8.85

4 P/BV ratio = Share price ÷ BVPS
= 52.54 ÷ 8.85 = 5.94

Ratio Description The company
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company's required rate of return and its actual rate of return. Applied Materials Inc.'s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017.

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