In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA NVDA and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within the industry.
NVIDIA Background
Nvidia is a leading developer of graphics processing units. Traditionally, GPUs were used to enhance the experience on computing platforms, most notably in gaming applications on PCs. GPU use cases have since emerged as important semiconductors used in artificial intelligence. Nvidia not only offers AI GPUs, but also a software platform, Cuda, used for AI model development and training. Nvidia is also expanding its data center networking solutions, helping to tie GPUs together to handle complex workloads.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| NVIDIA Corp | 64.03 | 54.78 | 34.21 | 32.31% | $17.75 | $20.41 | 262.12% |
| Broadcom Inc | 63.34 | 9.78 | 15.51 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 157.79 | 3.79 | 9.33 | 0.47% | $1.12 | $2.86 | 6.61% |
| Qualcomm Inc | 20.98 | 7.41 | 4.96 | 9.79% | $2.87 | $5.22 | 1.23% |
| Texas Instruments Inc | 33.51 | 10.25 | 11.02 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 300.26 | 22.48 | 36.41 | 4.35% | $0.23 | $0.91 | 46.6% |
| Intel Corp | 30.02 | 1.17 | 2.23 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 51.15 | 3.08 | 10.47 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 24.24 | 6.80 | 6.06 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 93.55 | 17.42 | 20.28 | 4.45% | $0.1 | $0.25 | 1.51% |
| ON Semiconductor Corp | 16.38 | 3.69 | 4.06 | 4.11% | $0.58 | $0.78 | -17.15% |
| GLOBALFOUNDRIES Inc | 29.83 | 2.36 | 3.77 | 1.19% | $0.54 | $0.39 | -15.86% |
| First Solar Inc | 19.51 | 3.22 | 6.24 | 4.94% | $0.48 | $0.5 | 24.65% |
| ASE Technology Holding Co Ltd | 19.42 | 2.22 | 1.15 | 2.62% | $26.08 | $23.07 | 2.91% |
| United Microelectronics Corp | 12.06 | 1.75 | 2.92 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 22.32 | 2.72 | 3.99 | 1.9% | $0.25 | $0.36 | -13.43% |
| Universal Display Corp | 46.19 | 6.79 | 16.56 | 3.86% | $0.07 | $0.13 | 26.67% |
| MACOM Technology Solutions Holdings Inc | 111.84 | 6.86 | 11.28 | 1.45% | $0.04 | $0.1 | 6.98% |
| Lattice Semiconductor Corp | 35.62 | 9.55 | 10.73 | 3.28% | $0.04 | $0.08 | -34.72% |
| Cirrus Logic Inc | 24.72 | 3.56 | 3.79 | 2.48% | $0.07 | $0.19 | -0.27% |
| Average | 58.56 | 6.57 | 9.51 | 3.17% | $3.54 | $3.63 | -0.1% |
When analyzing NVIDIA, the following trends become evident:
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Notably, the current Price to Earnings ratio for this stock, 64.03, is 1.09x above the industry norm, reflecting a higher valuation relative to the industry.
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The elevated Price to Book ratio of 54.78 relative to the industry average by 8.34x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 34.21, which is 3.6x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a higher Return on Equity (ROE) of 32.31%, which is 29.14% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $17.75 Billion is 5.01x above the industry average, highlighting stronger profitability and robust cash flow generation.
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With higher gross profit of $20.41 Billion, which indicates 5.62x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 262.12% exceeds the industry average of -0.1%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By analyzing NVIDIA in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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NVIDIA is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.23.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For NVIDIA, the high PE, PB, and PS ratios indicate that the company is trading at a premium compared to its peers in the Semiconductors & Semiconductor Equipment industry. This suggests that investors are willing to pay more for each unit of earnings, book value, and sales generated by NVIDIA. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth highlight the company's strong profitability and growth potential relative to its industry counterparts. This indicates that NVIDIA is efficiently utilizing its resources to generate profits and drive revenue growth.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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