Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Applied Materials's Probability of Financial Distress (%) is 0.02%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Applied Materials (BUE:AMAT) Probability of Financial Distress (%) Explanation
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Applied Materials Probability of Financial Distress (%) Related Terms
BUE:AMAT vs LRCX, KLAC, TER: Probability of Financial Distress (%) Comparison
For the Semiconductor Equipment & Materials subindustry, Applied Materials's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Applied Materials Probability of Financial Distress (%) vs Semiconductors Industry
For the Semiconductors industry and Technology sector, Applied Materials's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Applied Materials's Probability of Financial Distress (%) falls into.
Applied Materials Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
LPFD
=
-20.12 * NIMTAAVG
+
1.60 * TLMTA
-
7.88 * EXRETAVG
+
1.55 * SIGMA
-
0.005 * RSIZE
-
2.27 * CASHMTA
+
0.070 * MB
-
0.09 * PRICE
-
8.87
=
-8.73
The Probability of Financial Distress (%) (PFD) was then obtianed by:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
What does a Probability of Financial Distress (%) of 0.02% mean?
Applied Materials (BUE:AMAT) has a Probability of Financial Distress (%) of 0.02% as of Jun. 25, 2026.
Is Applied Materials' Probability of Financial Distress (%) too high?
Applied Materials' current Probability of Financial Distress (%) is 0.02%. Overall, Applied Materials has a GF Score™ of 84/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Applied Materials' Probability of Financial Distress (%) compare to LRCX and KLAC?
Applied Materials' Probability of Financial Distress (%) of 0.02% can be compared against companies in the Semiconductors industry. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Probability of Financial Distress (%) for a Semiconductors company?
A good Probability of Financial Distress (%) depends on the Semiconductors industry context. However, Probability of Financial Distress (%) should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Probability of Financial Distress (%) mean?
A high Probability of Financial Distress (%) can signal that a stock is expensive relative to its fundamentals. Applied Materials's current Probability of Financial Distress (%) is 0.02%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Applied Materials stock overvalued right now?
Based on GuruFocus' analysis, Applied Materials (BUE:AMAT) is currently considered Significantly Overvalued. The stock's GF Value™ is ARS66,776.56, compared to a current price of ARS180,750.00 — trading 170.7% above its estimated fair value. The current Probability of Financial Distress (%) is 0.02%. Applied Materials' overall GF Score™ is 84/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Probability of Financial Distress (%) calculated?
Probability of Financial Distress (%) is calculated from a company's financial statements. For Applied Materials (BUE:AMAT), the current Probability of Financial Distress (%) is 0.02% as of Jun. 25, 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Applied Materials (BUE:AMAT) Overvalued in 2026?
Based on GuruFocus' analysis, Applied Materials stock appears to be overvalued.
The current stock price of ARS180,750.00 is trading 170.7% above its estimated GF Value™ of ARS66,776.56.
GuruFocus considers Applied Materials to be Significantly Overvalued.
Key valuation signals for BUE:AMAT:
Probability of Financial Distress (%): 0.02%
GF Value™: ARS66,776.56 vs. price of ARS180,750.00 (170.7% above fair value)
No single metric tells the full story. See the BUE:AMAT stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Applied Materials is the largest semiconductor wafer fabrication equipment manufacturer in the world. It has a broad portfolio spanning nearly every corner of the WFE ecosystem. Applied Materials holds leading market share in deposition, which entails the layering of new materials on semiconductor wafers. It is more exposed to general-purpose logic chips made at integrated device manufacturers and foundries. It counts the largest chipmakers in the world as customers, including TSMC, Intel, and Samsung.
84GF Score
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Probability of Financial Distress (%) is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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