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40As requested by @HannahBaker : TYO: $8035 (-0,19 %) Analysis as of 17/11/2024.
6M: 📉 -0.48%
YTD: 📈 +9.96%
5Y: 📈 +33.55%
Company: Tokyo Electron is supplier of semiconductor production equipment (i.e., used to create semiconductor devices such as microprocessors, memory chips, integrated circuits) and flat panel display manufacturing equipment (i.e., used to create displays on tvs, phones).
Market Position: Key playe in semiconductor equipment market. Competes with $ASML (+3,19 %) , $LRCX (+4,98 %) , and $AMAT (+3,95 %). Would be positioned well for 5G, AI, Automotive Semiconductors, and QM.
Recent Developments: Increasing demand for advanced semiconductors has increased their B2B customer orders, mainly driven by Data Centres, AI, and IoT. However, Geopolitical tensions between Taiwan, China, and the rest of the world has added uncertainty due to possible restrictions on advanced chip exports (i.e., logistics halted).
MARKET CONTEXT
Macro Trends:
Competitive Landscape:
INVESTMENT THESIS
Bull Case:
Bear Case
Notes:
Expanded the position a little 😊👍
The earnings from yesterday 😊👍
Results of the fourth quarter
Applied achieved record sales of7.05 billion US dollars. On a GAAP basis, the company reported a gross margin of 47.3 percent, record operating income of $2.05 billion, or 29.0 percent of net sales, and earnings per share (EPS) of €2.09.
On a non-GAAP basis, the company reported a gross margin of 47.5 percent, record operating income of $2.06 billion, or 29.3 percent of net sales, and record earnings per share of $2.32.
The company generated $2.58 billion in cash from operating activities and distributed $1.77 billion to shareholders, including $1.44 billion in share repurchases and $329 million in dividends.
Results for the full year
In financial year 2024, Applied achieved record sales of27.18 billion US dollars. On a GAAP basis, the company reported a gross margin of 47.5 percent, record operating income of $7.87 billion, or 28.9 percent of net sales, and record earnings per share of $8.61.
On a non-GAAP adjusted basis, the company reported gross margin of 47.6 percent, record operating income of $7.92 billion, or 29.2 percent of net sales, and record earnings per share of $8.65.
The company generated $8.68 billion in cash from operating activities and distributed $5.01 billion to shareholders, including $3.82 billion in share repurchases and $1.19 billion in dividends.
Source:
What’s your opinion about$AMAT (+3,95 %) . Company looks like undervalued. The Q4 is was strong. There is a lot of competition but rest of the companies are overvalued. I will be glad to hear your opinions. I have bought yesterday and today the stock is -5%, which doesn’t concern me. Just curious to add more to my portfolio or to wait.
$AMAT (+3,95 %) | Applied Materials Q4 '24 Earnings Highlights
🔹 Adj. EPS: $2.32 (Est. $2.19) 🟢; UP +9% YoY
🔹 Revenue: $7.05B (Est. $6.96B) 🟢; UP +5% YoY
Q1'25 Guidance (Non-GAAP)
🔹 Revenue: $7.15B +/- $400M (Est. $7.24B) 🔴
🔹 EPS: $2.29 +/- $0.18 (Est. $2.27) 🟡
🔹 Gross Margin: 47.6% (Est. 47.6%) 🟡
🔹 Operating Margin: 29.5% (Est. 29.5%) 🟡
Q4 Segment Revenue
🔹 Semiconductor Systems: $5.18B (Est. $5.13B) 🟢; UP +6% YoY
🔹 Applied Global Services: $1.64B (Est. $1.61B) 🟢; UP +11% YoY
🔹 Display and Adjacent Markets: $211M (Est. $200.4M) 🟢; DOWN -29% YoY
Operating Metrics (Non-GAAP)
🔹 Gross Margin: 47.5% (Est. 47.4%) 🟢; UP +0.2 pp YoY
🔹 Operating Margin: 29.3% (Est. 29.1%) 🟢; DOWN -0.2 pp YoY
Cash Flow and Capital Allocation
🔹 Cash Flow from Operations: $2.58B (Est. $1.98B) 🟢; UP +30% YoY
🔹 Free Cash Flow: $2.17B (Est. $1.69B) 🟢; UP +74% YoY
🔹 Capital Expenditure: $280M (Est. $280.3M) 🟡
🔹 Shareholder Returns: $1.77B, including $1.44B in share repurchases and $329M in dividends
Full-Year 2024 Highlights
🔹 Annual Revenue: $27.18B; UP +2% YoY
🔹 GAAP EPS: $8.61; UP +6% YoY
🔹 Non-GAAP EPS: $8.65; UP +7% YoY
🔹 Cash Flow from Operations: $8.68B; UP slightly YoY
🔹 Shareholder Returns: $5.01B, including $3.82B in share repurchases and $1.19B in dividends
CEO Commentary
🔸 "Our technology leadership and strong execution led to record Q4 and fiscal 2024 performance. Applied Materials is uniquely positioned in the semiconductor market, driven by our focus on AI and energy-efficient computing solutions. Our continued investments in materials engineering will be key as we support our customers in advancing the semiconductor industry."
Semiconductor manufacturing equipment
Hello my dears,
Again and again I see the question, which machine manufacturer from the semiconductor industry should I buy now?
And ASML $ASML (+3,19 %) has been bought frequently in recent weeks due to the correction because it is supposedly the market leader with a monopoly.
That's why I've put together a comparison chart of the mechanical engineering companies over the last 5 years.
It is noticeable here that almost all of them are performing relatively similarly and that ASML is not the only one in the correction.
In terms of performance, however, Applied Materials and KLA stand out somewhat.
$AMAT (+3,95 %)
$KLAC (+3,32 %)
Of course, this is only a historical perspective and may look different in the future.
The most important manufacturers of semiconductor production equipment include:
Applied Materials, Inc. (USA)
ASML (Netherlands)
Tokyo Electron Limited (Japan)
Lam Research Corporation (USA)
KLA Corporation (USA)
SCREEN Holdings Co, Ltd (Japan)
Teradyne, Inc. (USA)
Advantest Corporation (Japan)
Hitachi High-Tech Corporation (Japan)
Plasma-Therm (USA)
The market for semiconductor manufacturing equipment is expected to grow from USD 109.24 billion in 2024 to USD 155.09 billion in 2029, at a CAGR of 7.3% during the forecast period.
Expansion of semiconductor manufacturing facilities, upsurge in the automotive semiconductor market and rising demand for advanced and efficient chips are some of the major factors driving the market growth. In addition, the expansion of advanced packaging technologies and government support for the domestic semiconductor industry provide ample opportunities to drive market growth.
https://www.marketsandmarkets.com/ResearchInsight/semiconductor-manufacturing-equipment-market.asp
In February 2024, I opened a securities account with Trade Republic and started saving 60 "stable" stocks from the S&5 500 per month with the aim of beating the S&P ETF in the long term. Since May, more than 30 additional stocks have been added and have proven to be an excellent decision so far. Among others $SFM (+2,19 %)
$AMP (+2,25 %)
$CMI (+2,89 %)
$SNA (+1,52 %)
$FI (+0,18 %)
$PANW (+7,32 %)
$ANET (+6,77 %) .
There are now over 150 positions and not only 🇺🇸 shares (over 90%) in the portfolio but also a handful from 🇩🇪🇬🇧🇳🇱🇯🇵🇸🇬. They still have to prove their quality, but so far only 🇺🇸 stocks have delivered performance.
9 months since the start, my "ETF" can keep up quite well although the goal of beating the S&P500 has not yet been achieved. But I'm close and in July the gap was somewhat wider.
Conclusion: The popular dividend stocks have not provided performance in the portfolio as $JNJ (+2,5 %)
$KO (+1,89 %)
$PG (+2,05 %)
$PEP (+1,54 %) The popular growth stocks from the semiconductor sector have not yet been able to prove their quality either. $ASML (+3,19 %)
$SNPS (+2,77 %)
$KLAC (+3,32 %)
$LRCX (+4,98 %)
$AMAT (+3,95 %) The healthcare sector has also been somewhat disappointing. $ISRG (+1,97 %) and $SYK (+1,66 %) are positive exceptions here.
The usual suspects, on the other hand, have performed very well, although Microsoft is lagging a little behind. Otherwise, the financial sector and almost all stocks in the industrial sector have performed well so far.
Let's see how things continue to develop.😁
Earnings next week (11.11 - 15.11)
U.S. CHIP TOOLMAKERS PUSH SUPPLIERS TO CUT CHINESE TIES - WSJ
Applied Materials $AMAT (+3,95 %) and Lam Research $LRCX (+4,98 %) have instructed suppliers to stop sourcing components or taking investments from Chinese entities, driven by U.S. government pressure to reduce China’s role in the semiconductor supply chain, per the WSJ. Suppliers failing to comply risk losing their vendor status.
These restrictions are expected to raise costs due to limited non-Chinese alternatives. Veeco $VECO (+2,02 %) has issued similar guidelines, mandating the end of Chinese supplier reliance by 2025. The shift basically reflects Washington’s increasingly strict stance on tech imports and concerns over China’s influence on U.S.-critical tech.
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