Learn From The Leaders: Victor Dergunov Step-By-Step Breakdown For Using Seeking Alpha (AMD Example)

Key Concepts

• Short Interest: The percentage of a stock’s float that has been sold short by investors, indicating bearish sentiment.
• Forward P/E Ratio: A valuation metric calculating the current stock price relative to future earnings per share.
• Quant Rating: Seeking Alpha’s proprietary, data-driven stock rating system.
• PEG Ratio: Price/Earnings to Growth ratio, a valuation metric used to determine the relative trade-off between the P/E ratio of a stock and its expected growth rate.
• EPS (Earnings Per Share): A company’s profit allocated to each outstanding share of common stock.
• Year-over-Year (YoY) Growth: The percentage change in a metric (e.g., revenue, EPS) compared to the same period in the previous year.
• Analyst Price Target: An analyst’s prediction of a stock’s future price.

Stock Analysis Using Seeking Alpha Premium: A Detailed Breakdown

This presentation details Victor, the investing group leader for The Financial Profit,’s methodology for stock analysis using the Seeking Alpha Premium platform, illustrated primarily through the example of Advanced Micro Devices (AMD). The process focuses on identifying growth opportunities and assessing valuation.

I. Initial Screening & Key Statistics

Victor begins his analysis on the Summary Page of a stock’s profile. A primary focus is short interest, considered a “red flag” if excessively high, particularly for established companies. He also reviews fundamental key statistics such as market capitalization and the forward Price-to-Earnings (P/E) ratio. These provide a preliminary overview of the stock’s size and valuation.

II. Ratings & Analyst Consensus

The Ratings Page is then examined, starting with Seeking Alpha’s Quant Rating system. More importantly, Victor analyzes Wall Street analyst ratings. He highlights the significance of the average price target, using AMD as an example. Currently, 51 analysts covering AMD have an average price target of $282.40, representing a 37% increase over the current stock price. The lowest price target is around $178, close to the current price, suggesting a favorable risk-reward profile with limited downside and substantial upside potential. He emphasizes that this dynamic indicates a potentially strong investment opportunity.

III. Earnings Analysis: Historical & Future Projections

Victor identifies the Earnings Page as the “most important section.” He prioritizes analyzing recent quarterly earnings to understand current performance and, crucially, upcoming quarters’ earnings to gauge future prospects. The page displays the EPS trend over the last four quarters and projections for the next 12 months.

The Earnings History section, showing performance over the last 5 years (20 quarters), is used to determine a company’s stability. Victor categorizes companies based on earnings patterns: stable earnings (like AMD), erratic earnings (riskier stocks), pre-earnings, or pre-revenue. He specifically notes AMD’s “solid earnings” and “considerable EPS and sales growth potential.”

IV. Earnings Estimates & Personal EPS Projection

Moving to the Earnings Estimates Page, Victor conducts the core of his analysis. He examines the consensus revenue estimates, along with the lower and higher end projections. For AMD, the consensus indicates robust 30-35% year-over-year sales growth. However, he places greater emphasis on the EPS side for established companies.

While the consensus EPS estimate for AMD is $6.42 for the next year, Victor projects a higher EPS of $7, believing that consensus analysts can sometimes lag behind actual performance. To calculate a revised forward P/E ratio, he divides the current stock price (around $200) by his EPS estimate ($7), resulting in a forward P/E of approximately 28 (compared to 32 based on the consensus estimate).

V. Valuation: Deriving the PEG Ratio

Victor emphasizes the importance of valuation, specifically using the Price/Earnings Growth (PEG) ratio. He details his proprietary formula for calculating the PEG ratio, based on data from Seeking Alpha.

He averages the year-over-year growth rates for the next three years: 62%, 56%, and 40%, totaling 158%. Dividing by three yields an average EPS growth rate of approximately 53%. He stresses the significance of this high growth rate.

The PEG ratio is then calculated by dividing the forward P/E ratio (28) by the average EPS growth rate (53), resulting in a PEG ratio of 0.53. He explains that, historically, value investors like Warren Buffett and Benjamin Graham considered a PEG ratio of 1 or lower to be relatively inexpensive. However, recognizing AMD as a growth stock, he uses a benchmark PEG ratio of 1.5.

Since AMD’s PEG ratio of 0.53 is significantly below 1.5 (approximately one-third), he concludes that AMD is “extremely cheap” even at $200. He posits that even a tripling of the stock price to $500 or $600 would still represent a fair valuation based on the PEG ratio, resulting in a PEG ratio of approximately 1.5.

VI. Conclusion

Victor concludes by summarizing his approach to stock analysis using Seeking Alpha Premium, emphasizing the importance of a comprehensive evaluation of earnings, growth potential, and valuation metrics. He encourages viewers to explore The Financial Profit investment group for further insights and proven portfolio strategies. He states, “Well, I hope you took something new away from how I use the Seeking Alpha Premium platform to do research on the stocks we own in our all-weather portfolio at the financial profit.”