Amkor Technology (Nasdaq: AMKR) might not be a household name, but it plays a crucial role in the semiconductor industry.
As the world’s largest U.S.-headquartered OSAT (outsourced semiconductor assembly and test) service provider, Amkor packages and tests chips for major tech companies. It serves a variety of industries, including communications, computing, automotive, and consumer electronics.
The company’s financial performance shows both strengths and challenges. In 2024, Amkor generated $6.3 billion in net sales, down about 3% from $6.5 billion in 2023. While computing revenue hit record levels, it couldn’t fully offset weakness in automotive, industrial, and communications markets. Fourth quarter results revealed further slowing, with revenue dropping from $1.8 billion to $1.6 billion year over year, while quarterly earnings fell from $0.48 per share to $0.43.
Despite these headwinds, Amkor remains financially solid. The company posted full-year net income of $354 million and generated substantial free cash flow of $359 million in 2024. Management has also shown confidence by increasing the company’s quarterly dividend by 5% and issuing a special $0.41 per share dividend in December.
Amkor’s balance sheet remains strong as well, with $1.6 billion in cash and short-term investments versus $1.2 billion in debt.
Looking at Amkor’s stock chart reveals quite a roller coaster ride. After hitting highs around $43 last July, shares have tumbled more than 60% to their current level around $16.
This dramatic decline naturally raises questions about valuation.
When we run Amkor through The Value Meter, we find some striking contrasts. The company’s enterprise value-to-net asset value (EV/NAV) ratio sits at just 0.83, which is a stunning 85% discount to the average of 5.72 for similar companies. This suggests that Amkor’s assets are remarkably cheap relative to its peers’.
However, its cash generation efficiency tells a different story. The company’s quarterly free cash flow has averaged just 2.08% of its net assets over the past year, less than half of the 4.61% average for similar companies. Though Amkor generated positive free cash flow in three of the last four quarters, it’s simply not as efficient at converting assets to cash as its peers.
The Value Meter rates Amkor as “Appropriately Valued,” finding that the stock’s rock-bottom asset valuation is largely offset by its below-average cash generation capabilities.
What stock would you like me to run through The Value Meter next? Post the ticker symbol(s) in the comments section below.