Why MKSI Could Outperform Applied Materials Stock
MKSI is Applied Materials’s peer in Semiconductor Materials & Equipment industry that has:
1) Lower valuation (P/OpInc) compared to Applied Materials stock
2) But higher revenue and operating income growth
This disconnect between valuation and performance could mean that you are better off buying MKSI stock vs. AMAT stock
Key Metrics Compared
- Applied Materials At 42x: Boom Or Bubble?
- Applied Materials Stock Surged 70%, Here’s Why
- The Bear Case: How AMAT Behaves During Market Shocks
- Five-Year Tally: Applied Materials Stock Delivers $27 Bil Gain
- Applied Materials Stock Pays Out $27 Bil – Investors Take Note
- Better Value & Growth: LRCX, AMAT Lead Onto Innovation Stock
| Metric | AMAT | MKSI |
|---|---|---|
| P/OpInc* | 38.8x | 34.2x |
| LTM OpInc Growth | 3.9% | 11.0% |
| 3Y Avg OpInc Growth | 2.6% | 5.7% |
| LTM Revenue Growth | 2.1% | 11.5% |
| 3Y Avg Revenue Growth | 2.4% | 4.3% |
OpInc = Operating Income, P/OpInc = Price To Operating Income Ratio
But do these numbers tell the full story? Read Buy or Sell AMAT Stock to see if Applied Materials still has an edge that holds up under the hood. As a quick background, Applied Materials (AMAT) provides manufacturing equipment, services, and software for semiconductor chip fabrication and advanced display technologies, including LCD, OLED, and related products.
This is just one approach to evaluate investments. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
Is The Mismatch In Stock Price Temporary
One way to check if Applied Materials stock is expensive now versus the other tickers would be to see how these metrics compared across companies exactly a year ago. Specifically, if there has been a marked reversal in the trend for Applied Materials in the last 12 months, then there is a chance that the current mismatch is likely to reverse. On the other hand, a persistent underperformance in revenue and operating income growth for Applied Materials would reinforce the conclusion that the stock is expensive compared to its peers, but may not revert soon
Key Metrics Compared 1 Yr Prior
| Metric | AMAT | MKSI |
|---|---|---|
| P/OpInc* | 14.5x | 9.1x |
| LTM OpInc Growth | 7.7% | 9.3% |
| 3Y Avg OpInc Growth | 2.9% | 0.3% |
| LTM Revenue Growth | 4.4% | 9.6% |
| 3Y Avg Revenue Growth | 3.2% | 3.6% |
OpInc = Operating Income
Additional Metrics To Consider
| Metric | AMAT | MKSI |
|---|---|---|
| P/S | 11.5x | 5.0x |
| Market Cap (Current) | $ 325.6 Bil | $ 20.3 Bil |
| LTM Revenue | $ 28.21 Bil | $ 4.07 Bil |
| LTM Opinc | $ 8.39 Bil | $ 593.00 Mil |
| LTM Op Margin | 29.7% | 14.6% |
OpInc = Operating Income
Alternate buying based on valuation, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed its benchmark – a combination of the S&P 500, Russell, and S&P midcap index.