Applied Materials, Inc. (AMAT): investment thesis checklist
What a value investor writing down why they own Applied Materials, Inc. would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 30.9% in FY2025; between 25.2% and 46.1% over 7 filed years, median 37.9%. Does the thesis need it to stay inside that range?
- Return on equity: 34.3% in FY2025; between 23.2% and 53.5% over 10 filed years, median 37.2%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 3.1% in FY2025; between 3.1% and 9.5% over 10 filed years, median 5.7%. Does the thesis need it to stay inside that range?
- EV to EBIT: 22.28x in FY2025; between 10.60x and 22.28x over 7 filed years, median 16.55x. Does the thesis need it to stay inside that range?
- Price to earnings: 26.41x in FY2025; between 10.93x and 26.41x over 10 filed years, median 18.02x. Does the thesis need it to stay inside that range?
- Gross margin: 48.7% in FY2025; between 41.7% and 48.7% over 10 filed years, median 45.8%. Does the thesis need it to stay inside that range?
- Operating margin: 29.2% in FY2025; between 19.9% and 30.2% over 10 filed years, median 27.9%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: -0.02x in FY2025; between -0.09x and 0.75x over 7 filed years, median 0.08x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 10.5% in FY2025; between 0.6% and 17.3% over 10 filed years, median 11.5%. Does the thesis need it to stay inside that range?
- Share count change: -3.1% in FY2025; between -9.0% and -0.4% over 10 filed years, median -3.4%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Applied Materials, Inc.'s own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 0.44x
Today 0.35x. Replayed over 7 filed years, it would have broken in 4; most recently FY2022, at 0.48x (10-K, filed 2022-12-16).
Return on Invested Capital stays at or above 24.8%
Today 30.94%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $2.09
Today $2.12. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 0.44x.
- A filed year in which return on invested capital fell below 24.8%.
- A filed year in which dividend rate fell below $2.09.
4. The published tests it meets today
Of 30 tests value investors published: 6 met, 24 not met, 0 we could not complete. Counts, never a score.
Meets: High returns and growth; ROIC at or above WACC; Z-score and coverage (Edward Altman); High returns, low debt; High return on tangibles; Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.