Dear Followers&Copiers, Another Financial Year (FY) has passed, the reporting season is over and it’s time to update the equity portfolio of the Global Leaders Portfolio (GLP) in terms of the SIAScore system we use.
Let’s quickly remind what SIAScore is and how the process :
S1: growing sector 1pts/0pts,
S2: incumbent or prospective global leader 1pts/0pts,
S3: growing or stable wide margins (40%+ gross; 3yr avg) 2pts/0pts,
S4: Net Debt/EBITDA <1.5 (last 3 ended FYs) 2pts/0pts,
S5: above-average cash flows (FCF/MktCap (last 3 ended FYs) > S&P500 Dividend Yield or US 10yr Treasry Yield (higher of the values)) 2pts/0pts;
MAX TOTAL SCORE: 8pts/MIN TOTAL SCORE: 0pts/MIN SCORE TO QUALIFY: 4pts
In this post I run a SIAScore update for one of the best semiconductor stocks in the world, which has shown a lot of growth momentum over the last few years:
S1-S1: these qualitative points are clear. $AMD both operates in a growing sector (S1) and is a potential global leader (S2). In both cases the company gets 1 point.
S3: 2 points
2018/2019/2020/AVG/last yr AVG
37,8%/42,6%/44,5%/41,63%/38,13%
$AMD managed to improve it’s average gross maring to over 40% for the last 3 years. This is due to the massive improvement over the last 2 FY’s. IT shows that the copmany’s hottest products (like the Ryzen processors) are a big success and allow $AMD to capitalize on it.
S4: 2 points
2018/2019/2020/AVG/last yr AVG
0,14/-0,84/-1/-0,57/0,03
The company also improves its net cash position and is now cash posisitve on average for the last 3 FYs, whilst yet last year it was cash neutral.
S5: 0 points
2018/2019/2020/AVG/last yr AVG
-0,7%/0,5%/0,7%/0,17%/-0,4%
Also a good improvement seen here. Average FCF yield for the last 3 FYs went positive from negative still last year. This is not yet enough though, as the yield is lower than both the $SPX500 dividend yield (1,53% as of now) and the 10Y treasury yield (1,6% os of now).
Aggregate SIAScore for $AMD: 6 points (an improvement from last year results of 4 points).
Conclusion: $AMD improves its financial standing on YoY basis and is still a long-term buy as the improving fundamentals continue the process of long-term value creation of the company.
Best regards, GlobalAlphaS
Disclaimers: None of the ideas, views and thoughts presented here shall ever be taken as a recommendation to buy or sell stocks,bonds,FX,commodities or any other financial instruments as stated in REGULATION (EU) No 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC or the Polish Act of 10 February 2017 amending the act on trading in financial instruments and some other acts. The article is for educational reasons and purely presents private views of the author, thus the author shall not be held accountable for any losses of a third party resulting from any potential trading activities in any instruments, both specifically or by category of assets. The author uses his best knowledge and data from sources believed to be reliable, but makes no representations as to the accuracy of the data.Full Disclaimers&Liability Limitations page.
