In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing NVIDIA NVDA alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to 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 | 53 | 49.89 | 29.47 | 31.13% | $22.86 | $26.16 | 93.61% |
| Broadcom Inc | 174.26 | 15.51 | 20.83 | -2.77% | $6.39 | $8.36 | 47.27% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.23 | 8.49 | 12.77 | 8.36% | $555.05 | $439.35 | 38.95% |
| Advanced Micro Devices Inc | 112.31 | 3.61 | 8.54 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 17.73 | 6.70 | 4.60 | 11.46% | $3.21 | $5.78 | 18.69% |
| Texas Instruments Inc | 35.61 | 10.12 | 11.20 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 251.14 | 26.56 | 45.66 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 146.43 | 2.53 | 4.56 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 66.04 | 3.06 | 11.46 | 1.36% | $1.12 | $1.42 | -10.06% |
| Microchip Technology Inc | 41.62 | 5.13 | 5.93 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 68.60 | 12.62 | 14.60 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.37 | 3.27 | 3.89 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.82 | 1.34 | 1.74 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 20.22 | 2.32 | 1.22 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 17.20 | 2.82 | 5.57 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.10 | 1.42 | 2.26 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 24.66 | 2.30 | 3.52 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 133.69 | 8.94 | 14.02 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 62.21 | 12.44 | 15.63 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 32.69 | 4.87 | 12.05 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 67.05 | 7.06 | 10.53 | 3.48% | $33.38 | $27.13 | 8.28% |
By carefully studying NVIDIA, we can deduce the following trends:
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The stock's Price to Earnings ratio of 53.0 is lower than the industry average by 0.79x, suggesting potential value in the eyes of market participants.
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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 49.89 which exceeds the industry average by 7.07x.
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With a relatively high Price to Sales ratio of 29.47, which is 2.8x 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 31.13%, which is 27.65% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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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 0.68x below the industry average, potentially indicating 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 a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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 examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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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 0.16, 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 indicate that the stock is relatively undervalued compared to its peers. However, the high ROE, low EBITDA, low gross profit, and high revenue growth suggest that the company is performing well and has strong growth potential within the industry 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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