Intrinsic value of Advanced Micro Devices - AMD

Previous Close

$19.61

  Intrinsic Value

$527.30

stock screener

  Rating & Target

str. buy

+999%

Previous close

$19.61

 
Intrinsic value

$527.30

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of AMD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.04
  52.60
  47.84
  43.56
  39.70
  36.23
  33.11
  30.30
  27.77
  25.49
  23.44
  21.60
  19.94
  18.44
  17.10
  15.89
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
Revenue, $m
  4,272
  8,132
  12,022
  17,259
  24,111
  32,846
  43,721
  56,967
  72,784
  91,337
  112,748
  137,098
  164,432
  194,759
  228,062
  264,299
  303,417
  345,350
  390,033
  437,400
  487,395
  539,971
  595,093
  652,742
  712,917
  775,632
  840,918
  908,826
  979,423
  1,052,793
  1,129,037
Variable operating expenses, $m
 
  3,685
  5,434
  7,788
  10,869
  14,796
  19,685
  25,640
  32,751
  41,092
  50,718
  61,636
  73,925
  87,559
  102,531
  118,823
  136,409
  155,261
  175,350
  196,645
  219,122
  242,758
  267,540
  293,458
  320,511
  348,706
  378,057
  408,587
  440,326
  473,311
  507,589
Fixed operating expenses, $m
 
  2,820
  2,882
  2,945
  3,010
  3,076
  3,144
  3,213
  3,284
  3,356
  3,430
  3,505
  3,582
  3,661
  3,742
  3,824
  3,908
  3,994
  4,082
  4,172
  4,264
  4,357
  4,453
  4,551
  4,651
  4,754
  4,858
  4,965
  5,074
  5,186
  5,300
Total operating expenses, $m
  4,712
  6,505
  8,316
  10,733
  13,879
  17,872
  22,829
  28,853
  36,035
  44,448
  54,148
  65,141
  77,507
  91,220
  106,273
  122,647
  140,317
  159,255
  179,432
  200,817
  223,386
  247,115
  271,993
  298,009
  325,162
  353,460
  382,915
  413,552
  445,400
  478,497
  512,889
Operating income, $m
  -440
  1,627
  3,707
  6,526
  10,232
  14,974
  20,892
  28,114
  36,750
  46,889
  58,600
  71,957
  86,925
  103,539
  121,789
  141,652
  163,099
  186,095
  210,601
  236,583
  264,010
  292,855
  323,100
  354,733
  387,755
  422,172
  458,003
  495,274
  534,023
  574,296
  616,148
EBITDA, $m
  -307
  1,765
  3,897
  6,786
  10,584
  15,443
  21,507
  28,906
  37,754
  48,142
  60,140
  73,794
  89,128
  106,149
  124,845
  145,194
  167,165
  190,722
  215,827
  242,445
  270,541
  300,091
  331,074
  363,480
  397,308
  432,566
  469,271
  507,452
  547,147
  588,403
  631,277
Interest expense (income), $m
  149
  124
  263
  455
  713
  1,051
  1,483
  2,019
  2,673
  3,454
  4,370
  5,427
  6,629
  7,978
  9,475
  11,119
  12,908
  14,839
  16,909
  19,115
  21,453
  23,921
  26,517
  29,238
  32,084
  35,054
  38,150
  41,373
  44,726
  48,211
  51,833
Earnings before tax, $m
  -448
  1,503
  3,444
  6,071
  9,519
  13,923
  19,410
  26,094
  34,076
  43,435
  54,230
  66,530
  80,296
  95,561
  112,313
  130,533
  150,191
  171,255
  193,692
  217,468
  242,557
  268,934
  296,583
  325,495
  355,671
  387,118
  419,852
  453,901
  489,297
  526,085
  564,315
Tax expense, $m
  39
  406
  930
  1,639
  2,570
  3,759
  5,241
  7,046
  9,201
  11,728
  14,642
  17,963
  21,680
  25,801
  30,325
  35,244
  40,552
  46,239
  52,297
  58,716
  65,490
  72,612
  80,077
  87,884
  96,031
  104,522
  113,360
  122,553
  132,110
  142,043
  152,365
Net income, $m
  -497
  1,097
  2,514
  4,432
  6,949
  10,164
  14,169
  19,049
  24,876
  31,708
  39,588
  48,567
  58,616
  69,759
  81,989
  95,289
  109,640
  125,016
  141,395
  158,752
  177,066
  196,322
  216,505
  237,612
  259,640
  282,596
  306,492
  331,348
  357,187
  384,042
  411,950

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,264
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,321
  5,421
  8,015
  11,506
  16,074
  21,897
  29,147
  37,978
  48,523
  60,892
  75,165
  91,399
  109,621
  129,840
  152,041
  176,200
  202,278
  230,233
  260,022
  291,600
  324,930
  359,981
  396,729
  435,162
  475,278
  517,088
  560,612
  605,884
  652,949
  701,862
  752,691
Adjusted assets (=assets-cash), $m
  2,057
  5,421
  8,015
  11,506
  16,074
  21,897
  29,147
  37,978
  48,523
  60,892
  75,165
  91,399
  109,621
  129,840
  152,041
  176,200
  202,278
  230,233
  260,022
  291,600
  324,930
  359,981
  396,729
  435,162
  475,278
  517,088
  560,612
  605,884
  652,949
  701,862
  752,691
Revenue / Adjusted assets
  2.077
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
  1.500
Average production assets, $m
  387
  545
  806
  1,156
  1,615
  2,201
  2,929
  3,817
  4,877
  6,120
  7,554
  9,186
  11,017
  13,049
  15,280
  17,708
  20,329
  23,138
  26,132
  29,306
  32,655
  36,178
  39,871
  43,734
  47,765
  51,967
  56,342
  60,891
  65,621
  70,537
  75,645
Working capital, $m
  1,184
  8
  12
  17
  24
  33
  44
  57
  73
  91
  113
  137
  164
  195
  228
  264
  303
  345
  390
  437
  487
  540
  595
  653
  713
  776
  841
  909
  979
  1,053
  1,129
Total debt, $m
  1,435
  2,950
  5,107
  8,012
  11,812
  16,658
  22,689
  30,036
  38,810
  49,101
  60,977
  74,483
  89,644
  106,466
  124,937
  145,037
  166,734
  189,993
  214,777
  241,050
  268,781
  297,943
  328,517
  360,494
  393,870
  428,656
  464,868
  502,535
  541,692
  582,388
  624,678
Total liabilities, $m
  2,905
  4,511
  6,668
  9,573
  13,373
  18,219
  24,250
  31,597
  40,371
  50,662
  62,538
  76,044
  91,205
  108,027
  126,498
  146,598
  168,295
  191,554
  216,338
  242,611
  270,342
  299,504
  330,078
  362,055
  395,431
  430,217
  466,429
  504,096
  543,253
  583,949
  626,239
Total equity, $m
  416
  911
  1,347
  1,933
  2,700
  3,679
  4,897
  6,380
  8,152
  10,230
  12,628
  15,355
  18,416
  21,813
  25,543
  29,602
  33,983
  38,679
  43,684
  48,989
  54,588
  60,477
  66,650
  73,107
  79,847
  86,871
  94,183
  101,789
  109,695
  117,913
  126,452
Total liabilities and equity, $m
  3,321
  5,422
  8,015
  11,506
  16,073
  21,898
  29,147
  37,977
  48,523
  60,892
  75,166
  91,399
  109,621
  129,840
  152,041
  176,200
  202,278
  230,233
  260,022
  291,600
  324,930
  359,981
  396,728
  435,162
  475,278
  517,088
  560,612
  605,885
  652,948
  701,862
  752,691
Debt-to-equity ratio
  3.450
  3.240
  3.790
  4.140
  4.370
  4.530
  4.630
  4.710
  4.760
  4.800
  4.830
  4.850
  4.870
  4.880
  4.890
  4.900
  4.910
  4.910
  4.920
  4.920
  4.920
  4.930
  4.930
  4.930
  4.930
  4.930
  4.940
  4.940
  4.940
  4.940
  4.940
Adjusted equity ratio
  -0.412
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -497
  1,097
  2,514
  4,432
  6,949
  10,164
  14,169
  19,049
  24,876
  31,708
  39,588
  48,567
  58,616
  69,759
  81,989
  95,289
  109,640
  125,016
  141,395
  158,752
  177,066
  196,322
  216,505
  237,612
  259,640
  282,596
  306,492
  331,348
  357,187
  384,042
  411,950
Depreciation, amort., depletion, $m
  133
  138
  190
  260
  352
  469
  615
  792
  1,004
  1,253
  1,540
  1,837
  2,203
  2,610
  3,056
  3,542
  4,066
  4,628
  5,226
  5,861
  6,531
  7,236
  7,974
  8,747
  9,553
  10,393
  11,268
  12,178
  13,124
  14,107
  15,129
Funds from operations, $m
  270
  1,235
  2,704
  4,692
  7,301
  10,633
  14,784
  19,841
  25,880
  32,961
  41,128
  50,404
  60,819
  72,369
  85,045
  98,831
  113,705
  129,644
  146,621
  164,613
  183,597
  203,557
  224,480
  246,358
  269,193
  292,989
  317,760
  343,526
  370,311
  398,150
  427,079
Change in working capital, $m
  180
  3
  4
  5
  7
  9
  11
  13
  16
  19
  21
  24
  27
  30
  33
  36
  39
  42
  45
  47
  50
  53
  55
  58
  60
  63
  65
  68
  71
  73
  76
Cash from operations, $m
  90
  1,232
  2,700
  4,687
  7,294
  10,624
  14,773
  19,828
  25,864
  32,942
  41,107
  50,380
  60,792
  72,339
  85,011
  98,795
  113,666
  129,602
  146,577
  164,566
  183,547
  203,505
  224,425
  246,301
  269,133
  292,927
  317,695
  343,458
  370,241
  398,076
  427,003
Maintenance CAPEX, $m
  0
  -71
  -109
  -161
  -231
  -323
  -440
  -586
  -763
  -975
  -1,224
  -1,511
  -1,837
  -2,203
  -2,610
  -3,056
  -3,542
  -4,066
  -4,628
  -5,226
  -5,861
  -6,531
  -7,236
  -7,974
  -8,747
  -9,553
  -10,393
  -11,268
  -12,178
  -13,124
  -14,107
New CAPEX, $m
  -77
  -188
  -261
  -351
  -459
  -585
  -729
  -887
  -1,060
  -1,243
  -1,435
  -1,631
  -1,831
  -2,032
  -2,231
  -2,428
  -2,621
  -2,810
  -2,994
  -3,174
  -3,350
  -3,523
  -3,693
  -3,863
  -4,032
  -4,202
  -4,374
  -4,550
  -4,730
  -4,916
  -5,108
Cash from investing activities, $m
  267
  -259
  -370
  -512
  -690
  -908
  -1,169
  -1,473
  -1,823
  -2,218
  -2,659
  -3,142
  -3,668
  -4,235
  -4,841
  -5,484
  -6,163
  -6,876
  -7,622
  -8,400
  -9,211
  -10,054
  -10,929
  -11,837
  -12,779
  -13,755
  -14,767
  -15,818
  -16,908
  -18,040
  -19,215
Free cash flow, $m
  357
  973
  2,331
  4,175
  6,604
  9,716
  13,604
  18,355
  24,041
  30,724
  38,448
  47,237
  57,124
  68,103
  80,170
  93,311
  107,504
  122,727
  138,955
  156,166
  174,337
  193,451
  213,496
  234,464
  256,354
  279,172
  302,928
  327,640
  353,332
  380,036
  407,787
Issuance/(repayment) of debt, $m
  -561
  1,555
  2,158
  2,905
  3,800
  4,845
  6,032
  7,347
  8,774
  10,291
  11,876
  13,506
  15,161
  16,822
  18,472
  20,100
  21,697
  23,259
  24,784
  26,273
  27,731
  29,162
  30,574
  31,976
  33,377
  34,786
  36,212
  37,666
  39,158
  40,696
  42,290
Issuance/(repurchase) of shares, $m
  667
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  122
  1,555
  2,158
  2,905
  3,800
  4,845
  6,032
  7,347
  8,774
  10,291
  11,876
  13,506
  15,161
  16,822
  18,472
  20,100
  21,697
  23,259
  24,784
  26,273
  27,731
  29,162
  30,574
  31,976
  33,377
  34,786
  36,212
  37,666
  39,158
  40,696
  42,290
Total cash flow (excl. dividends), $m
  479
  2,528
  4,489
  7,079
  10,404
  14,561
  19,636
  25,702
  32,815
  41,014
  50,324
  60,744
  72,285
  84,925
  98,642
  113,410
  129,201
  145,986
  163,739
  182,439
  202,067
  222,613
  244,070
  266,440
  289,731
  313,957
  339,140
  365,306
  392,490
  420,732
  450,077
Retained Cash Flow (-), $m
  -828
  -315
  -436
  -586
  -767
  -978
  -1,218
  -1,484
  -1,772
  -2,078
  -2,398
  -2,727
  -3,061
  -3,397
  -3,730
  -4,059
  -4,381
  -4,697
  -5,004
  -5,305
  -5,599
  -5,888
  -6,174
  -6,457
  -6,740
  -7,024
  -7,312
  -7,606
  -7,907
  -8,217
  -8,539
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,213
  4,053
  6,493
  9,637
  13,583
  18,418
  24,218
  31,043
  38,936
  47,926
  58,016
  69,223
  81,528
  94,912
  109,352
  124,820
  141,289
  158,735
  177,134
  196,468
  216,724
  237,896
  259,984
  282,992
  306,933
  331,828
  357,700
  384,583
  412,515
  441,538
Discount rate, %
 
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
 
  2,118
  3,695
  5,615
  7,865
  10,407
  13,174
  16,074
  18,996
  21,815
  24,406
  26,645
  28,434
  29,686
  30,348
  30,397
  29,844
  28,729
  27,122
  25,109
  22,794
  20,288
  17,697
  15,125
  12,658
  10,368
  8,305
  6,503
  4,972
  3,709
  2,697
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Advanced Micro Devices, Inc. is a global semiconductor company. The Company is engaged in offering x86 microprocessors, as standalone devices or as incorporated into an accelerated processing unit (APU), chipsets, discrete graphics processing units (GPUs) and professional graphics, and server and embedded processors and semi-custom System-on-Chip (SoC) products and technology for game consoles. The Company's segments include the Computing and Graphics segment, and the Enterprise, Embedded and Semi-Custom segment. The Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete GPUs and professional graphics. The Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, semi-custom SoC products, development services, technology for game consoles and licensing portions of its intellectual property portfolio.

FINANCIAL RATIOS  of  Advanced Micro Devices (AMD)

Valuation Ratios
P/E Ratio -36.9
Price to Sales 4.3
Price to Book 44.1
Price to Tangible Book
Price to Cash Flow 203.7
Price to Free Cash Flow 1410.4
Growth Rates
Sales Growth Rate 7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.8%
Cap. Spend. - 3 Yr. Gr. Rate -1.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 345%
Total Debt to Equity 345%
Interest Coverage -2
Management Effectiveness
Return On Assets -10.5%
Ret/ On Assets - 3 Yr. Avg. -10.6%
Return On Total Capital -27%
Ret/ On T. Cap. - 3 Yr. Avg. -24.8%
Return On Equity -24850%
Return On Equity - 3 Yr. Avg. -8124.5%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 23.4%
Gross Margin - 3 Yr. Avg. 27.9%
EBITDA Margin -3.9%
EBITDA Margin - 3 Yr. Avg. -4.4%
Operating Margin -10.3%
Oper. Margin - 3 Yr. Avg. -8.8%
Pre-Tax Margin -10.5%
Pre-Tax Margin - 3 Yr. Avg. -11.3%
Net Profit Margin -11.6%
Net Profit Margin - 3 Yr. Avg. -11.8%
Effective Tax Rate -8.7%
Eff/ Tax Rate - 3 Yr. Avg. -4%
Payout Ratio 0%

AMD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMD stock intrinsic value calculation we used $5329 million for the last fiscal year's total revenue generated by Advanced Micro Devices. The default revenue input number comes from 2016 income statement of Advanced Micro Devices. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AMD stock valuation model: a) initial revenue growth rate of 52.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.5%, whose default value for AMD is calculated based on our internal credit rating of Advanced Micro Devices, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Advanced Micro Devices.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AMD stock the variable cost ratio is equal to 45.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2759 million in the base year in the intrinsic value calculation for AMD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 8.9% for Advanced Micro Devices.

Corporate tax rate of 27% is the nominal tax rate for Advanced Micro Devices. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AMD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AMD are equal to 6.7%.

Life of production assets of 3.5 years is the average useful life of capital assets used in Advanced Micro Devices operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AMD is equal to 0.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $596 million for Advanced Micro Devices - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 969.344 million for Advanced Micro Devices is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Advanced Micro Devices at the current share price and the inputted number of shares is $19.0 billion.

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Financial statements of AMD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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