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 | 55.36 | 52.11 | 30.78 | 31.13% | $22.86 | $26.16 | 93.61% |
| Broadcom Inc | 185.80 | 16.60 | 22.20 | 6.49% | $7.29 | $9.0 | 51.2% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.30 | 8.77 | 13.20 | 8.36% | $555.05 | $439.35 | 38.95% |
| Advanced Micro Devices Inc | 111.76 | 3.60 | 8.50 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 17.83 | 6.74 | 4.62 | 11.46% | $3.21 | $5.78 | 18.69% |
| Texas Instruments Inc | 35.77 | 10.17 | 11.25 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 217.88 | 23.04 | 39.61 | 1.83% | $0.11 | $0.81 | 4.71% |
| Analog Devices Inc | 66.49 | 3.08 | 11.54 | 1.36% | $1.12 | $1.42 | -10.06% |
| Micron Technology Inc | 25.58 | 2.13 | 3.45 | 4.07% | $4.3 | $3.35 | 84.28% |
| Microchip Technology Inc | 40.67 | 5.01 | 5.80 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 69.85 | 12.85 | 14.86 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.85 | 3.37 | 4 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.56 | 1.31 | 1.70 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 21.14 | 2.42 | 1.27 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.04 | 2.63 | 5.20 | 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 | 24.49 | 2.28 | 3.49 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 130.60 | 8.92 | 13.70 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 59.70 | 11.94 | 15 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 30.82 | 4.59 | 11.36 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 59.26 | 6.89 | 10.17 | 4.08% | $33.46 | $27.2 | 8.01% |
By analyzing NVIDIA, we can infer the following trends:
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The Price to Earnings ratio of 55.36 is 0.93x lower than the industry average, indicating potential undervaluation for the stock.
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With a Price to Book ratio of 52.11, which is 7.56x 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 30.78, which is 3.03x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 31.13% is 27.05% above the industry average, highlighting 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 0.68x below the industry average, potentially indicating 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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With a revenue growth of 93.61%, which surpasses the industry average of 8.01%, the company is demonstrating robust sales expansion and gaining market share.
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.
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 has a 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 suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
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. In terms of ROE, NVIDIA outperforms with a high ratio, reflecting efficient use of shareholder equity. However, low EBITDA and gross profit levels may indicate operational challenges. High revenue growth indicates a positive outlook for future earnings potential.
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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