In the fast-paced 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 in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 71.89 | 61.50 | 38.41 | 32.31% | $17.75 | $20.41 | 262.12% |
| Broadcom Inc | 71.58 | 11.05 | 17.52 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 175.43 | 4.22 | 10.37 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 22.17 | 7.83 | 5.24 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 35.02 | 10.72 | 11.51 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 322.41 | 24.14 | 39.09 | 4.07% | $0.23 | $0.91 | 39.11% |
| Analog Devices Inc | 52.26 | 3.15 | 10.69 | 0.85% | $0.93 | $1.18 | -33.83% |
| Intel Corp | 86.21 | 0.77 | 1.60 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 109.61 | 20.44 | 23.76 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 32.41 | 6.81 | 6.74 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 17.29 | 3.90 | 4.28 | 4.11% | $0.58 | $0.78 | -17.15% |
| STMicroelectronics NV | 9.54 | 1.63 | 1.88 | 2.07% | $0.45 | $1.3 | -25.29% |
| GLOBALFOUNDRIES Inc | 31.12 | 2.23 | 3.67 | 1.38% | $0.56 | $0.4 | -11.54% |
| First Solar Inc | 20.50 | 3.39 | 6.56 | 4.94% | $0.48 | $0.5 | 24.65% |
| United Microelectronics Corp | 13.44 | 2 | 3.14 | 3.76% | $27.9 | $19.98 | 0.89% |
| ASE Technology Holding Co Ltd | 20.25 | 2.31 | 1.20 | 2.62% | $26.08 | $23.07 | 2.91% |
| Skyworks Solutions Inc | 22.48 | 2.74 | 4.01 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 40.27 | 5.83 | 14.35 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 107.03 | 7.08 | 11.37 | 1.88% | $0.04 | $0.1 | 28.25% |
| Cirrus Logic Inc | 26.35 | 4.10 | 4.28 | 2.3% | $0.07 | $0.19 | 17.98% |
| Lattice Semiconductor Corp | 36.68 | 9.83 | 11.05 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 62.6 | 6.71 | 9.62 | 3.03% | $3.52 | $3.63 | -0.02% |
By closely examining NVIDIA, we can identify the following trends:
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The Price to Earnings ratio of 71.89 for this company is 1.15x above the industry average, indicating a premium valuation associated with the stock.
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The elevated Price to Book ratio of 61.5 relative to the industry average by 9.17x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 38.41, which is 3.99x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 32.31% that is 29.28% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $17.75 Billion, which is 5.04x above the industry average, implying stronger profitability and robust cash flow generation.
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The company has higher gross profit of $20.41 Billion, which indicates 5.62x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 262.12% is notably higher compared to the industry average of -0.02%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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 demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.23, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
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 experiencing robust revenue expansion.
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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