In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA NVDA vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight 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 | 54.22 | 51.04 | 30.15 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.73 | 8.09 | 12.18 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 140.05 | 12.47 | 16.74 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 115.58 | 3.72 | 8.79 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 17.70 | 6.69 | 4.59 | 11.46% | $3.21 | $5.78 | 18.69% |
| Texas Instruments Inc | 35.63 | 10.13 | 11.20 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 244.68 | 25.87 | 44.48 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 140.34 | 2.43 | 4.37 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 66.38 | 3.07 | 11.52 | 1.36% | $1.12 | $1.42 | -10.06% |
| Microchip Technology Inc | 42.71 | 5.26 | 6.09 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 68.26 | 12.56 | 14.53 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.65 | 3.33 | 3.96 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.79 | 1.34 | 1.73 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.66 | 2.25 | 1.18 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.91 | 2.77 | 5.48 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.13 | 1.42 | 2.27 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 24.29 | 2.26 | 3.47 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 131.24 | 8.77 | 13.76 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 61.24 | 12.25 | 15.38 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 32.35 | 4.82 | 11.92 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 64.49 | 6.82 | 10.19 | 3.48% | $33.38 | $27.13 | 8.28% |
When conducting a detailed analysis of NVIDIA, the following trends become clear:
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At 54.22, the stock's Price to Earnings ratio is 0.84x less than the industry average, suggesting favorable growth potential.
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The elevated Price to Book ratio of 51.04 relative to the industry average by 7.48x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 30.15, surpassing the industry average by 2.96x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 31.13% that is 27.65% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion, which is 0.68x below the industry average, the company may face lower profitability or financial challenges.
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With lower gross profit of $26.16 Billion, which indicates 0.96x 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 93.61% exceeds the industry average of 8.28%, indicating strong sales performance and market outperformance.
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.
In light of the Debt-to-Equity ratio, a comparison between NVIDIA and its top 4 peers reveals the following information:
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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 0.16.
Key Takeaways
For NVIDIA, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. The high ROE reflects efficient use of shareholder equity, while low EBITDA and gross profit may indicate operational challenges. The high revenue growth rate signals strong sales performance relative to industry peers in the Semiconductors & Semiconductor Equipment sector.
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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