AMD - Intrinsic value of Advanced Micro Devices, Inc.

overvalued

Currently the market value of AMD is higher than its intrinsic value.

Market Price

$96.645

Intrinsic Price

$9.55

Market Cap

$157B

% Dividend

M.Safety

Growth

18.00 %

PE Ratio

96.64

EPS

Asts/Liab

5.94

Beta

1.885

EBTD/Val

1.34 %

EBTD/Cap

12.72 %

	Int Value
$103.28	$9.87	--	80.00	0.04%	$2.94	2T	35.13	113.03	3.34
$186.54	--	--	11.00	--	$5.52	1T	33.79	14.75	3.50
$159.03	$182.65	14.85	11.00	0.51%	$8.05	1T	19.76	35.46	6.15
$163.85	$195.01	19.02	11.00	0.5%	$8.04	1T	20.38	35.46	6.05
$284.95	$9.13	--	24.00	--	$1.74	917B	163.76	9.35	1.02
$120.28	$1,221.30	915.38	10.00	1.68%	$6.81	287B	17.66	16.25	48.86
$334.37	$236.19	--	14.00	0.71%	$9.91	645B	33.74	146.06	3.76
$866.39	--	--	17.00	0.7%	$11.69	778B	74.11	40.48	1.67
$509.75	$294.34	--	14.00	0.6%	$13.87	464B	36.75	315.79	3.35
$94.96	$23.48	--	6.00	0.99%	$2.41	761B	39.40	12.40	3.57

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Advanced Micro Devices, Inc.'s Intrinsic Value Calculation

Step 1: Calcualting the growth

End of year 1 value = $16434000000
End of year 2 value = $23601000000
End of year 3 value = $22680000000
End of year 4 value = $25785000000

Year 2 growth = $23601000000 / $16434000000 - 1 = %43.61
Year 3 growth = $22680000000 / $23601000000 - 1 = %-3.90
Year 4 growth = $25785000000 / $22680000000 - 1 = %13.69

AAGR(Annula average growth rate): %43.61 + %-3.90+ %13.69 / 3 = %17.80

Step 2: Projecting future revenues and cashflows

Now that we have the avarege growth rate of the past 4 years, we can calculate the revenues for the next 4 year using the growth rate as our multiple.

We calculate the margins between the revenues/netincome and net incomes/free cashflows, and take the minimal margins to calculate the future net incomes and free cash flows.

2025 - Revenue:30426300000. Net Income:1156199400. Free Cash Flow:1177010989.

2026 - Revenue:35903034000. Net Income:1364315292. Free Cash Flow:1388872967.

2027 - Revenue:42365580120. Net Income:1609892044. Free Cash Flow:1638870100.

2028 - Revenue:49991384541.6. Net Income:1899672612. Free Cash Flow:1933866719.

Step 3: Calculate the WACC

Wacc stands for Weighted Avarege Cost of Capital and it presents the company's cost of capital. We use the WACC in our calculation to estimate the Required Rate of Return (RRR).

Wacc formula: WACC = [(E/V) x Re] + [(D/V) x Rd x (1 - Tc)]

E = Market value of the firm’s equity D = Market value of the firm’s debt V = E+D Re = Cost of equity Rd = Cost of debt Tc = Corporate tax rate

The WACC of AMD is 0.13

Step 4: Calculate the terminal value

In order to calculate the terminal value of AMD this formula will be in use:

TV = (FCF x [1 + g]) / (WACC – g)

FCF = free cash flow of the current year g = perpetual growth rate WACC = Weighted Avereg Cost of Capital

The terminal value of AMD is 18036955565

Step 5: Discount future cashflows

For discounting the future cash flows we will use this formula:

DCF = CF1/(1+r)^1 + CF2/(1+r)^2 + CFn/(1+r)^n

Cf1 = The cash flow for year one. CF2 = The cash flow for year two. CFn = The cash flow for additional years. r = The discount rate.

The discounted cash flows of AMD

2025 discounted cash flow: 1041602645
2026 discounted cash flow: 1085057005
2027 discounted cash flow: 1138104236
2028 discounted cash flow: 1186421300
terminal discounted cash flow: 11065616911.042946

Step 6: Calculate the intrinsic value

After we have all the discounted future cashflows all we have to do now is the divide the sum of all future cashflows by the shares outstanding of AMD

Sum of cashflows: 15516802097

Shares oustanding: 1624630016

Intrinsic value of AMD

15516802097 / 1624630016 = $10