In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. 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 | 68.57 | 61.70 | 37.82 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.54 | 7.87 | 12.88 | 8.36% | $360.77 | $439.35 | 38.95% |
| Broadcom Inc | 140.21 | 12.35 | 17.19 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 123.27 | 3.97 | 9.37 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 38.24 | 10.87 | 12.02 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 17.94 | 6.78 | 4.65 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 223.33 | 23.62 | 40.60 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 142.74 | 2.45 | 4.45 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 64.11 | 3 | 10.95 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 46.24 | 5.70 | 6.59 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 67.82 | 12.48 | 14.43 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 17 | 3.40 | 4.04 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.65 | 1.33 | 1.71 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.14 | 2.19 | 1.15 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 15.69 | 2.57 | 5.09 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.64 | 1.58 | 2.49 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 17.19 | 2.10 | 3.07 | 1.9% | $0.25 | $0.36 | -15.47% |
| MACOM Technology Solutions Holdings Inc | 123.76 | 8.25 | 12.98 | 2.67% | $0.04 | $0.1 | 5.37% |
| Universal Display Corp | 33.64 | 5.01 | 12.40 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 49.60 | 9.92 | 12.46 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 62.88 | 6.6 | 9.92 | 3.5% | $23.05 | $27.1 | 5.78% |
Through an analysis of NVIDIA, we can infer the following trends:
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The Price to Earnings ratio of 68.57 for this company is 1.09x above the industry average, indicating a premium valuation associated with the stock.
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With a Price to Book ratio of 61.7, which is 9.35x 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 37.82, surpassing the industry average by 3.81x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 30.94%, which is 27.44% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion, which is 0.86x below the industry average, the company may face 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% 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 is a key indicator of a company's financial health and its reliance on debt financing.
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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When comparing the debt-to-equity ratio, NVIDIA is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two 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 future prospects. 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 financial performance 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.
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