Applied Materials Stock Jumped More Than 3.5x Since 2018: Here’s Why
Applied Materials Inc. (NASDAQ: AMAT) stock price rose 3.6x from $32 in 2018 end to around $120 currently, primarily due to favorable changes in its P/S multiple. During this period, the company also witnessed a 49% rise in revenues and a 13% drop in the outstanding share count. Due to this, the company’s stock price has rallied and managed to outperform the S&P 500, which returned a little over 60% during the same period.
In our interactive dashboard, Why Applied Materials Stock Moved: AMAT Stock Has Gained 265% Since 2018, we break down the factors behind this move.
(A) AMAT’s Total Revenue has risen 49% from $16.7 billion in FY 2018 to $24.8 billion currently
- AMAT’s total revenue initially dropped to $14.6 billion in FY ’19 before rising to $17.2 billion in FY ’20 as demand started picking up (AMAT’s fiscal year ends in October).
- Further, demand has surged since, and sales rose to $23.1 billion in FY ’21, and currently stand as high as $24.8 billion on an LTM basis.
- Semiconductor systems sales make up the bulk of Applied Materials’ revenues, with $6.68 billion of the company’s sales coming from this segment as of FY ’21, making up almost 60% of total revenue.
- For details about AMAT’s EBITDA and comparison to peers, see Applied Materials (AMAT) EBITDA Comparison
- Rallying 30% YTD, What’s Spurring The Rally In Applied Materials’ Stock?
- Up 35% This Year, How Will Applied Materials Stock Trend Following Q4 Results?
- Up 50% This Year, Will Applied Materials Stock Continue To Outperform?
- What To Expect As Applied Materials Reports Q3 Earnings?
- What’s Happening With Applied Materials Stock?
- What To Expect From Applied Materials Q2 Results?
(B) Revenue per share (RPS) increased 72% from $16.50 in FY 2018 to $28.30 currently
- AMAT’s revenue rose from $16.7 billion in FY 2018 to $24.8 billion currently, while the outstanding share count dropped from 1 billion in FY 2018 to around 0.9 billion currently.
- Due to this, RPS has jumped 72% from $16.50 in FY ’18 to $28.30 currently.
(C) Price-To-Sales (P/S) multiple for AMAT rose strongly from 1.7x in 2018 to 5.9x by 2021 end but has pulled back to 4.2x currently, still around 2.5x higher than its 2018 level
- AMAT’s P/S multiple rose strongly to around 5.9x by late 2021, on the back of rising investor expectations surrounding increased demand for its semiconductors, leading to a rise in the company’s sales.
- However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 4.2x.
- For additional details about the company stock returns and comparison to peers, see Applied Materials (AMAT) Stock Return Comparison.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
| Returns | May 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| AMAT Return | 6% | -25% | 263% |
| S&P 500 Return | 0% | -13% | 85% |
| Trefis Multi-Strategy Portfolio | 0% | -17% | 225% |
[1] Month-to-date and year-to-date as of 5/31/2022
[2] Cumulative total returns since the end of 2016
Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates