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 | 55.86 | 50.25 | 30.80 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.56 | 7.55 | 11.74 | 6.67% | $474.12 | $358.12 | 40.07% |
| Broadcom Inc | 132.92 | 11.71 | 16.30 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 179.49 | 4.32 | 10.61 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 21.10 | 7.45 | 4.99 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 33.97 | 10.40 | 11.17 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 343.89 | 25.75 | 41.70 | 4.07% | $0.23 | $0.91 | 39.11% |
| Analog Devices Inc | 66.72 | 3.13 | 11.40 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 80.67 | 0.72 | 1.49 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 106.70 | 19.90 | 23.13 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 30.31 | 6.37 | 6.31 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 15.80 | 3.56 | 3.91 | 4.11% | $0.58 | $0.78 | -17.15% |
| First Solar Inc | 21.08 | 3.48 | 6.74 | 4.94% | $0.48 | $0.5 | 24.65% |
| STMicroelectronics NV | 7.36 | 1.41 | 1.71 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 27.34 | 1.96 | 3.23 | 1.38% | $0.56 | $0.4 | -11.54% |
| United Microelectronics Corp | 13.15 | 1.95 | 3.07 | 3.76% | $27.9 | $19.98 | 0.89% |
| ASE Technology Holding Co Ltd | 19.22 | 2.19 | 1.14 | 2.62% | $26.08 | $23.07 | 2.91% |
| Skyworks Solutions Inc | 20.75 | 2.53 | 3.71 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 43.57 | 6.31 | 15.52 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 102.16 | 6.75 | 10.85 | 1.88% | $0.04 | $0.1 | 28.25% |
| Cirrus Logic Inc | 24.90 | 3.87 | 4.05 | 2.3% | $0.07 | $0.19 | 17.98% |
| Lattice Semiconductor Corp | 31.94 | 8.56 | 9.62 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 64.46 | 6.66 | 9.64 | 3.01% | $26.01 | $20.54 | 2.52% |
When closely examining NVIDIA, the following trends emerge:
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The Price to Earnings ratio of 55.86 is 0.87x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 50.25 relative to the industry average by 7.55x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 30.8, which is 3.2x 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 Return on Equity (ROE) of 30.94% is 27.93% above the industry average, highlighting efficient use of equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion, which is 0.76x below the industry average. This potentially indicates lower profitability or financial challenges.
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The company has higher gross profit of $22.57 Billion, which indicates 1.1x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 122.4% exceeds the industry average of 2.52%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
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 considering the Debt-to-Equity ratio, NVIDIA can be compared to its top 4 peers, leading to the following observations:
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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 0.17, 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 PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. The high ROE reflects efficient use of shareholder equity, while the low EBITDA may indicate room for operational improvement. The high gross profit margin and revenue growth rate demonstrate strong financial performance and growth potential within the industry sector.
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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