The Advanced Micro Devices, Inc. (AMD) Stock Rally Is Not Yet Over

What To Expect From AMD’s Earnings Report

Advanced Micro Devices, Inc. (NASDAQ:AMD) is scheduled to report its fiscal fourth quarter financial results on Thursday, January 19, after market close. According to 18 analysts’ average estimate, earnings per share are expected to be -$0.02. The company posted a loss of 10 cents per share in the same quarter a year ago. The highest estimate is for a loss of $0.01 a share while the lowest is for a loss of $0.03 a share, not a big difference. Revenue for the fourth quarter is expected to increase 11.9% YoY to $1.07 billion, according to 21 analysts’ average estimate.

There was one EPS up revision during the last 30 days. Since AMD has shown significant earnings per share surprise in its most recent four quarters, as shown in the table below, there is a good chance that the company will beat estimates also in the third quarter. (See also: Advanced Micro Devices, Inc: Is AMD Stock Set To Skyrocket After Ryzen Release?).

AMD’s Financial Position

Although the company has registered losses in most of its last few quarters, its financial position has improved significantly. At the end of the third quarter, on September 24, AMD had cash and cash equivalents of $1,258 million, this compared to cash and cash equivalents of $957 million at the end of the previous quarter, and to $785 million at the end of 2015. The improvement in AMD’s cash position represented an addition of $473 million in the first three-quarters of 2016. According to the company, the third quarter cash balance included about $274 million of net proceeds from recent capital markets transactions. Also, AMD’s debt had decreased by about 10% from $1,633 million on December 26, 2015, to $1,473 million at the end of the third quarter.

Conclusion

Although AMD stock price had appreciated by 295.1% in 2016 and continued to rise on the first trading day of 2017, and the company is not expected to show a profit in the fourth quarter of 2016, in my opinion, AMD stock still has room to rise further. The reason for my belief that AMD stock could go higher is the company’s strong growth prospects due to innovative new products and technologies.

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The article The Advanced Micro Devices Inc. (AMD) Stock Rally Is Not Yet Over originally appeared on amigobulls.com. Watch our analysis video on AMD.

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Additional Links:

(1) https://www.tipranks.com/stocks/amd?ref=il