AMD (NASDAQ:AMD) reported Q4 adjusted EPS of $1.09, slightly better than street expectations of $1.08. Over the last 8 quarters now, AMD has beaten street estimates 5 times and 3 have come in exactly as expected.
Earnings came in 0.9% above expectations, which was below the 8-quarter average of 1.8% (orange line). Although results are skewed by the outsized beat of Q1 2023.
Earnings growth is heating up again, with Q4 making the 3rd straight quarter of accelerating earnings.
Sales beat street estimates as the company reported Q4 revenue of $7.658 billion. AMD has now beaten sales estimates in 7 of the last 8 quarters.
Sales came in 1.7% above estimates, better than the 8-quarter average (orange line) of 1.2%.
Sales growth is also heating up again, as the company reported 3 straight quarters of accelerating sales growth.
So we have accelerating sales and earnings growth; with street expectations of 41% EPS growth and 23% sales growth over the next 4 quarters. However, the stock has seemed to fall out of favor recently, with AMD falling 22% over the last 200 trading days compared to a gain of 22% in the S&P 500.
Strong Pullback May Be an Opportunity (SO:FTCE11B)
The stock is down over 50% from its record high. Not at all unusual for a high-growth stock, but it is unusual to lag this far behind against the backdrop of rising market averages. However, the pullback in the stock may now lead to value opportunities for investors. The forward price-to-earnings ratio is now 23.6, which makes it one of the few (maybe the only?!) growth tech name whose forward growth rates are greater than the current valuation.
If we look at the chart above, its clear to see that price is in a well-defined downtrend. The areas I’d be looking at for potential support is the $93 level and the $80 for sure, if it ever got that low. The $80 area would match the size of the 2022 bear market.
My feeling is the stock is getting oversold and this is an overreaction. But momentum can be difficult to reverse and may take time to flip. I’ll be looking at the price reactions if we hit those key pivot levels, or if we can break the down trend line, possibly signaling a trend change.