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 | 65.71 | 59.11 | 36.24 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.09 | 7.92 | 11.92 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 133.82 | 11.79 | 16.41 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 122.95 | 3.96 | 9.35 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 38.51 | 10.94 | 12.11 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 18.40 | 6.96 | 4.77 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 212.70 | 22.49 | 38.67 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 139.30 | 2.40 | 4.34 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 63.15 | 2.96 | 10.79 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 45.31 | 5.58 | 6.46 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 66.27 | 12.19 | 14.10 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.50 | 3.30 | 3.92 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.27 | 1.28 | 1.65 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.49 | 2.23 | 1.17 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.84 | 2.76 | 5.46 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.98 | 1.54 | 2.46 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 22.76 | 2.12 | 3.25 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 118.49 | 7.92 | 12.43 | 2.67% | $0.05 | $0.11 | 33.47% |
| Universal Display Corp | 33.20 | 4.94 | 12.24 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 49.17 | 9.83 | 12.35 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 61.48 | 6.48 | 9.68 | 3.47% | $33.37 | $27.12 | 7.5% |
By closely examining NVIDIA, we can identify the following trends:
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The Price to Earnings ratio of 65.71 for this company is 1.07x above the industry average, indicating a premium valuation associated with the stock.
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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 59.11 which exceeds the industry average by 9.12x.
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The Price to Sales ratio of 36.24, which is 3.74x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 30.94% that is 27.47% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion, which is 0.59x below the industry average. This potentially indicates 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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The company's revenue growth of 122.4% is notably higher compared to the industry average of 7.5%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative 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.
By evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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NVIDIA is in a relatively 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 implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
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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