In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA NVDA against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 | 69.21 | 62.27 | 38.17 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 36.07 | 8.46 | 13.85 | 8.36% | $360.77 | $439.35 | 38.95% |
| Broadcom Inc | 148.34 | 13.06 | 18.19 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 130.93 | 4.21 | 9.96 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 40.95 | 11.64 | 12.88 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 19.11 | 7.22 | 4.96 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 243.82 | 25.78 | 44.33 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 159.91 | 2.75 | 4.98 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 68.01 | 3.19 | 11.62 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 50.61 | 6.24 | 7.21 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 85.84 | 15.79 | 18.27 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 17.47 | 3.49 | 4.15 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.91 | 1.36 | 1.75 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.59 | 2.24 | 1.18 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.70 | 2.73 | 5.41 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.98 | 1.63 | 2.57 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 18.42 | 2.25 | 3.29 | 1.9% | $0.25 | $0.36 | -15.47% |
| MACOM Technology Solutions Holdings Inc | 132.56 | 8.84 | 13.90 | 2.67% | $0.04 | $0.1 | 5.37% |
| Universal Display Corp | 36.12 | 5.38 | 13.32 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 53.46 | 10.69 | 13.43 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 68.41 | 7.21 | 10.8 | 3.5% | $23.05 | $27.1 | 5.78% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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The Price to Earnings ratio of 69.21 for this company is 1.01x above the industry average, indicating a premium valuation associated with the stock.
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With a Price to Book ratio of 62.27, which is 8.64x 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 38.17, surpassing the industry average by 3.53x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 30.94% is 27.44% above the industry average, highlighting efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion is 0.86x below the industry average, suggesting potential lower profitability or financial challenges.
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The gross profit of $22.57 Billion is 0.83x below that of its industry, suggesting potential lower revenue after accounting for production costs.
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The company's revenue growth of 122.4% is notably higher compared to the industry average of 5.78%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its 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.
When examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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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 profitability and future prospects. However, the low EBITDA and gross profit levels may raise concerns about operational efficiency and cost management within the company.
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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