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GLOBALFOUNDRIES Inc GFS

Morningstar Rating
$49.75 +1.14 (2.35%)
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Company Report

Globalfoundries: Secondary Offer Not Enticing and Likely Not One-Time

Globalfoundries announced it will repurchase $200 million of shares at $50.75 per share from its largest shareholder, Mubadala Technology Investment Company, as part of the latter’s $950 million offering. We maintain our fair value estimate at $42 as Globalfoundries will not receive any proceeds from the offering and the size of the repurchase is not significant. The deal is not favorable to Globalfoundries and potential subscribers since we view Globalfoundries as overvalued for its lower profitability than peers. Shares are down 5% after hours upon the news. We think the offering could be the second phase of a multiyear exit plan for Mubadala following its IPO. We anticipate Mubadala to offer small batches of shares regularly, especially near the peaks of upcoming semiconductor cycles.

Price vs Fair Value

GFS is trading at a 78% premium.
Price
$49.75
Fair Value
$72.00
Uncertainty
High
1-Star Price
$14.20
5-Star Price
$82.10
Economic Moat
Bpzr
Capital Allocation
Mdzgjjjm

Bulls Say, Bears Say

Bulls

An unexpectedly strong boom in low-power, untethered devices will boost demand for GF’s specialty processes.

Bears

Single-sourced products may offer limited assurance as customers can find cheaper or superior substitutes from peers.

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News

Trading Information

Previous Close Price
$48.61
Day Range
$48.2249.78
52-Week Range
$45.5268.57
Bid/Ask
$48.00 / $49.73
Market Cap
$27.44 Bil
Volume/Avg
1.5 Mil / 1.6 Mil

Key Statistics

Price/Earnings (Normalized)
24.51
Price/Sales
3.90
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

GlobalFoundries is a top-five contract semiconductor manufacturer globally. It was originally the manufacturing arm of Advanced Micro Devices before it was spun out in 2009. The foundry sells chips into a range of end markets including smartphones, PCs, Internet of Things, data centers, automotive, industrial, and so on, but primarily focuses on more mature process technologies. Until 2021, the firm was privately held by Mubadala Investment, the sovereign wealth fund of the United Arab Emirates. GlobalFoundries merged with Chartered Semiconductor Manufacturing in 2009 and acquired IBM's chipmaking business in 2015. GF is headquartered in Malta, New York, and employs about 12,000 people.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Mid Core
Total Number of Employees
12,000

Competitors

Valuation

Metric
GFS
00981
01347
Price/Earnings (Normalized)
24.5127.5214.40
Price/Book Value
2.460.890.81
Price/Sales
3.902.721.93
Price/Cash Flow
10.805.936.86
Price/Earnings
GFS
00981
01347

Financial Strength

Metric
GFS
00981
01347
Quick Ratio
1.591.206.06
Current Ratio
2.181.606.76
Interest Coverage
2.142.12
Quick Ratio
GFS
00981
01347

Profitability

Metric
GFS
00981
01347
Return on Assets (Normalized)
5.33%1.53%2.43%
Return on Equity (Normalized)
8.90%3.61%4.58%
Return on Invested Capital (Normalized)
6.62%0.65%3.04%
Return on Assets
GFS
00981
01347
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