In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating NVIDIA NVDA in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer 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 | 56.04 | 52.75 | 31.16 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.52 | 8.04 | 12.10 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 132.66 | 11.68 | 16.26 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 122.43 | 3.94 | 9.31 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 36.80 | 10.46 | 11.57 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 17.54 | 6.63 | 4.55 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 224.82 | 23.77 | 40.87 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 146.63 | 2.52 | 4.57 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 64.64 | 3.03 | 11.04 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 46.31 | 5.71 | 6.60 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 17.28 | 3.45 | 4.11 | 4.75% | $0.63 | $0.8 | -19.21% |
| Monolithic Power Systems Inc | 65.48 | 12.05 | 13.93 | 6.35% | $0.17 | $0.34 | 30.59% |
| STMicroelectronics NV | 10.07 | 1.25 | 1.62 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.80 | 2.27 | 1.19 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.02 | 2.62 | 5.19 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.85 | 1.52 | 2.43 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.15 | 2.16 | 3.30 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 129.33 | 8.65 | 13.56 | 2.67% | $0.05 | $0.11 | 33.47% |
| Universal Display Corp | 33.82 | 5.04 | 12.47 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 53.15 | 10.63 | 13.35 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 63.23 | 6.6 | 9.9 | 3.47% | $33.37 | $27.12 | 7.5% |
Through a thorough examination of NVIDIA, we can discern the following trends:
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At 56.04, the stock's Price to Earnings ratio is 0.89x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 52.75, which is 7.99x 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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With a relatively high Price to Sales ratio of 31.16, which is 3.15x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 31.13% that is 27.66% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion, which is 0.69x below the industry average, potentially indicating lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $26.16 Billion, which indicates 0.96x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of 93.61% 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 is an important measure to assess the financial structure and risk profile of a company.
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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When considering the debt-to-equity ratio, NVIDIA exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.16, which can be perceived as a positive aspect by investors.
Key Takeaways
The low P/E ratio suggests NVIDIA is undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the market values the company's assets and sales more favorably. On the other hand, the high ROE and revenue growth, along with low EBITDA and gross profit, highlight potential for strong performance and growth in the future.
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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