Assessing ACM Research (ACMR) Valuation After Institutional Interest And Three Year Earnings Growth

Institutional interest and three year growth put ACM Research in focus

ACM Research (ACMR) is back on many investors’ screens after strong institutional buying coincided with three year sales growth of 44.5% and EPS growth of 41.6%, highlighting robust underlying business metrics.

See our latest analysis for ACM Research.

ACM Research’s share price has moved to US$53.45 after a 4.5% 1 day gain, capping a 31.0% 30 day share price return and a very large 1 year total shareholder return of 186%, which suggests momentum has been building as investors reassess its growth profile and risk outlook.

If ACM Research has caught your eye, it could be a useful time to see what else is moving in semiconductors and related hardware through high growth tech and AI stocks.

With ACM Research trading at US$53.45, above its average analyst price target and with an intrinsic value estimate also below the current share price, investors may ask whether there is still a buying opportunity or if the market is already pricing in potential future growth.

Price-to-Earnings of 29.6x: Is it justified?

ACM Research trades on a P/E of 29.6x, which sits below both its industry and peer averages, even after the share price move to US$53.45.

The P/E ratio compares the current share price with earnings per share, so it gives you a quick sense of how much investors are paying for each dollar of profit. For a semiconductor equipment business that is already profitable and has grown earnings by 29.8% over the past year and 35.6% per year over five years, this is a key reference point for how the market is weighing its track record.

According to the Simply Wall St checks, ACM Research’s current P/E of 29.6x is below the US Semiconductor industry average of 43.9x and well below the peer average of 89.9x. It also sits under the estimated fair P/E ratio of 36x, which indicates there may be scope for the market’s valuation to move closer to that fair multiple if earnings trends remain consistent with current expectations.

Explore the SWS fair ratio for ACM Research

Result: Price-to-Earnings of 29.6x (UNDERVALUED)

However, there are risks to keep in mind, including ACM Research trading above its average analyst price target and an intrinsic value estimate that is below the current share price.

Find out about the key risks to this ACM Research narrative.

Another View: DCF Points To A Richer Price

While the 29.6x P/E makes ACM Research look inexpensive against the US Semiconductor industry at 43.9x and peers at 89.9x, our DCF model tells a different story. With shares at US$53.45 versus an estimated future cash flow value of US$47.47, the stock screens as overvalued on this basis. For you, that raises a simple question: which signal do you trust more, earnings today or projected cash flows tomorrow?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ACM Research for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 876 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Build Your Own ACM Research Narrative

If you see the data differently or prefer to test your own assumptions, you can build a customised ACM Research view in minutes with Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding ACM Research.

Looking for more investment ideas?

If ACMR interests you, do not stop there, the broader market offers plenty of other angles you can scan quickly to round out your watchlist.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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