AMAT - Embedded Expectations Analysis - 2021 04 09
Applied Materials, Inc. (AMAT:USA) currently trades at recent highs relative to UAFRS-based (Uniform) earnings with a 21.0x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management may have concerns about revenue growth, new product offerings, and the sustainability of wafer demandSpecifically, management may lack confidence in their ability to optimize new structures and materials, capitalize on their clients' geographic expansion, and sustain growth in their service business through technological innovation. Furthermore, they may be exaggerating the potential of their new source technology for electron optics as well as the capabilities of their e-beam products. Moreover, management may lack confidence in their ability to sustain overall revenue growth, continue gross margin improvement across all segments, and assist customers with their technology roadmap strategies. They may also have concerns about their new integrated hybrid bonding system partnership as well as the sustainability of demand, particularly in the WFE market
Applied Materials provides manufacturing equipment, services and software to the semiconductor, display and related industries. The company's segments are: Semiconductor Systems, which develops, manufactures and sells a range of manufacturing equipment used to fabricate semiconductor chips; Applied Global Services, which provides integrated solutions to support equipment and fab performance and productivity; and Display and Adjacent Markets, which is comprised of products for manufacturing liquid crystal displays, organic light-emitting diodes and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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