In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA NVDA against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim 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 | 69.80 | 62.80 | 38.49 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 36.06 | 8.46 | 13.85 | 8.36% | $360.77 | $439.35 | 38.95% |
| Broadcom Inc | 148.47 | 13.08 | 18.20 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 132.58 | 4.27 | 10.08 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 40.43 | 11.49 | 12.71 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 19.34 | 7.31 | 5.01 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 249.06 | 26.34 | 45.28 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 162.01 | 2.79 | 5.05 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 68.61 | 3.21 | 11.72 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 51.62 | 6.36 | 7.36 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 87.40 | 16.08 | 18.60 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 17.88 | 3.57 | 4.25 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 11.16 | 1.39 | 1.79 | 1.98% | $0.79 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 20.13 | 2.31 | 1.21 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.94 | 2.77 | 5.49 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 11.11 | 1.65 | 2.60 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 18.84 | 2.30 | 3.36 | 1.9% | $0.25 | $0.36 | -15.47% |
| MACOM Technology Solutions Holdings Inc | 133.79 | 8.92 | 14.03 | 1.88% | $0.04 | $0.1 | 28.25% |
| Universal Display Corp | 36.84 | 5.49 | 13.58 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 53.97 | 10.80 | 13.56 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 69.28 | 7.29 | 10.93 | 3.46% | $23.06 | $27.1 | 6.98% |
When conducting a detailed analysis of NVIDIA, the following trends become clear:
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The current Price to Earnings ratio of 69.8 is 1.01x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
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With a Price to Book ratio of 62.8, which is 8.61x the industry average, NVIDIA might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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The stock's relatively high Price to Sales ratio of 38.49, surpassing the industry average by 3.52x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 30.94% is 27.48% above the industry average, highlighting efficient use of equity to generate profits.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion, which is 0.85x below the industry average, the company may face lower profitability or financial challenges.
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With lower gross profit of $22.57 Billion, which indicates 0.83x below the industry average, the company may experience lower revenue after accounting for production costs.
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With a revenue growth of 122.4%, which surpasses the industry average of 6.98%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage 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.
In terms of the Debt-to-Equity ratio, NVIDIA can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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NVIDIA has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.17.
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This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
Key Takeaways
For NVIDIA, the PE, PB, and PS ratios are all high compared to industry peers, indicating a potentially overvalued stock. On the other hand, the high ROE and revenue growth suggest strong performance and growth potential. However, the low EBITDA and gross profit may raise concerns about operational efficiency and profitability compared to competitors in the Semiconductors & Semiconductor Equipment industry.
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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