In the fast-paced 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 in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 66.56 | 59.89 | 36.71 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.83 | 7.91 | 11.82 | 8.39% | $318.15 | $439.35 | 38.95% |
| Broadcom Inc | 133.15 | 11.73 | 16.32 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 119.38 | 3.84 | 9.08 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 37.38 | 10.62 | 11.75 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 17.95 | 6.79 | 4.65 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 212.82 | 22.50 | 38.69 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 137.63 | 2.37 | 4.29 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 62.15 | 2.91 | 10.62 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 43.65 | 5.38 | 6.22 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 64.64 | 11.89 | 13.76 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.07 | 3.21 | 3.82 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.40 | 1.29 | 1.67 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 18.99 | 2.18 | 1.14 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.40 | 2.69 | 5.32 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.72 | 1.50 | 2.40 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 22.68 | 2.11 | 3.24 | 0.95% | $0.25 | $0.36 | 13.19% |
| MACOM Technology Solutions Holdings Inc | 118.27 | 7.91 | 12.40 | 2.67% | $0.05 | $0.11 | 33.47% |
| Universal Display Corp | 32.94 | 4.91 | 12.14 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 48.26 | 9.65 | 12.12 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 60.7 | 6.39 | 9.55 | 3.45% | $20.81 | $27.1 | 8.76% |
After a detailed analysis of NVIDIA, the following trends become apparent:
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Notably, the current Price to Earnings ratio for this stock, 66.56, is 1.1x above the industry norm, reflecting a higher valuation relative to the industry.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 59.89 which exceeds the industry average by 9.37x.
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With a relatively high Price to Sales ratio of 36.71, which is 3.84x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a higher Return on Equity (ROE) of 30.94%, which is 27.49% 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 0.95x below the industry average, the company may face lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $22.57 Billion, which indicates 0.83x below the industry average, potentially indicating lower revenue after accounting for production costs.
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With a revenue growth of 122.4%, which surpasses the industry average of 8.76%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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 assessing NVIDIA against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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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 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 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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