In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing NVIDIA NVDA alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide 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 | 55.14 | 51.91 | 30.66 | 31.13% | $22.86 | $26.16 | 93.61% |
| Broadcom Inc | 180.12 | 16.09 | 21.53 | 6.49% | $7.29 | $9.0 | 51.2% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.43 | 8.80 | 13.25 | 8.36% | $555.05 | $439.35 | 38.95% |
| Advanced Micro Devices Inc | 110.27 | 3.55 | 8.38 | 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 | 35.34 | 10.04 | 11.11 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 209.74 | 22.18 | 38.13 | 1.83% | $0.11 | $0.81 | 4.71% |
| Analog Devices Inc | 65.52 | 3.03 | 11.37 | 1.36% | $1.12 | $1.42 | -10.06% |
| Micron Technology Inc | 25.71 | 2.14 | 3.46 | 4.07% | $4.3 | $3.35 | 84.28% |
| Microchip Technology Inc | 40.19 | 4.95 | 5.73 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 69.59 | 12.80 | 14.81 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.53 | 3.31 | 3.93 | 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 | 20.77 | 2.38 | 1.25 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.05 | 2.63 | 5.20 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.70 | 1.50 | 2.40 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 24.44 | 2.28 | 3.49 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 129.52 | 8.85 | 13.58 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 58.94 | 11.79 | 14.81 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 30.41 | 4.53 | 11.21 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 58.18 | 6.78 | 9.99 | 4.08% | $33.46 | $27.2 | 8.01% |
By conducting a comprehensive analysis of NVIDIA, the following trends become evident:
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With a Price to Earnings ratio of 55.14, which is 0.95x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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With a Price to Book ratio of 51.91, which is 7.66x 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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The stock's relatively high Price to Sales ratio of 30.66, surpassing the industry average by 3.07x, 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 27.05% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion is 0.68x below the industry average, suggesting potential lower profitability or financial challenges.
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The company has lower gross profit of $26.16 Billion, which indicates 0.96x below the industry average. This potentially indicates lower revenue after accounting for production costs.
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The company's revenue growth of 93.61% exceeds the industry average of 8.01%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 analyzing NVIDIA in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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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 0.16.
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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
The low P/E ratio suggests that NVIDIA may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the stock may be overvalued based on its book value and sales. On the other hand, the high ROE, low EBITDA, low gross profit, and high revenue growth suggest that NVIDIA is performing well in terms of profitability and growth compared to its industry peers.
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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