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 | 68.10 | 61.27 | 37.56 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 34.68 | 8.13 | 13.32 | 8.36% | $360.77 | $439.35 | 38.95% |
| Broadcom Inc | 144.52 | 12.73 | 17.72 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 130.40 | 4.20 | 9.91 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 40.12 | 11.40 | 12.62 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 18.82 | 7.12 | 4.88 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 234.70 | 24.82 | 42.67 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 155.21 | 2.67 | 4.84 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 66.41 | 3.11 | 11.34 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 48.53 | 5.98 | 6.92 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 72.98 | 13.43 | 15.53 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 17.36 | 3.47 | 4.13 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 11.05 | 1.38 | 1.78 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.16 | 2.19 | 1.15 | 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 | 10.69 | 1.59 | 2.50 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 18.18 | 2.22 | 3.25 | 1.9% | $0.25 | $0.36 | -15.47% |
| MACOM Technology Solutions Holdings Inc | 129.32 | 8.62 | 13.56 | 2.67% | $0.04 | $0.1 | 5.37% |
| Universal Display Corp | 35.14 | 5.23 | 12.95 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 51.53 | 10.31 | 12.94 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 66.08 | 6.91 | 10.39 | 3.5% | $23.05 | $27.1 | 5.78% |
After a detailed analysis of NVIDIA, the following trends become apparent:
-
At 68.1, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.03x, suggesting a premium valuation relative to industry peers.
-
The elevated Price to Book ratio of 61.27 relative to the industry average by 8.87x suggests company might be overvalued based on its book value.
-
The Price to Sales ratio of 37.56, which is 3.62x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
-
With a Return on Equity (ROE) of 30.94% that is 27.44% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
-
Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion, which is 0.86x below the industry average, potentially indicating lower profitability or financial challenges.
-
The gross profit of $22.57 Billion is 0.83x below that of its industry, suggesting potential lower revenue after accounting for production costs.
-
The company's revenue growth of 122.4% exceeds the industry average of 5.78%, indicating strong sales performance and market outperformance.
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 evaluating NVIDIA alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
-
In terms of the debt-to-equity ratio, NVIDIA has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
-
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.17.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE, PB, and PS ratios are all high compared to peers, indicating a potentially overvalued stock. On the other hand, the high ROE and revenue growth suggest strong profitability and potential for future growth. However, the low EBITDA and gross profit may raise concerns about operational efficiency and cost management. Overall, NVIDIA's performance in the industry is characterized by high valuation multiples and strong profitability metrics.
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.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
