How Sensitive Is AMD To Its EBITDA Margin Change?
We estimate that AMD’s (NYSE:AMD) EBITDA will likely double in 2018, primarily led by its Computing & Graphics segment, which has seen solid growth of late, led by its Ryzen and Radeon products. We have created an interactive dashboard on AMD’s sensitivity to changes in its EBITDA margin. Note that you can adjust the margin drivers, and see the impact on AMD’s overall valuation and price estimate. Below are some of the charts and data from the interactive dashboard.
Expect Computing & Graphics Segment EBITDA Margins To Rise Sharply In The Near Term
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Note that the margins used in our calculation are adjusted margins. We adjust EBITDA figures to exclude non-cash charges. If EBITDA Margin for both the divisions grow at a slower pace than expected with Computing & Graphics margin of 13.5%, and Enterprise, Embedded and Semi-Custom margin of 12.5% by 2019, it would result in a 16% decline in our valuation for the company. On the other hand, if margins were to increase to 19% and to 18% for both the segments respectively over the same period, there will be a 13% upside in our price estimate.
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Like our charts? Explore example interactive dashboards and create your own.