In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA NVDA in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 55.24 | 52 | 30.71 | 31.13% | $22.86 | $26.16 | 93.61% |
| Broadcom Inc | 190.20 | 16.99 | 22.73 | 6.49% | $7.29 | $9.0 | 51.2% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.74 | 8.62 | 12.97 | 8.36% | $555.05 | $439.35 | 38.95% |
| Advanced Micro Devices Inc | 110.67 | 3.56 | 8.41 | 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 | 35.64 | 10.13 | 11.21 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 214.41 | 22.67 | 38.98 | 1.83% | $0.11 | $0.81 | 4.71% |
| Analog Devices Inc | 66.48 | 3.08 | 11.54 | 1.36% | $1.12 | $1.42 | -10.06% |
| Micron Technology Inc | 25.74 | 2.14 | 3.47 | 4.07% | $4.3 | $3.35 | 84.28% |
| Microchip Technology Inc | 40.60 | 5 | 5.79 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 69.88 | 12.86 | 14.87 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.63 | 3.32 | 3.95 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.51 | 1.31 | 1.69 | 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 | 15.82 | 2.59 | 5.13 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.60 | 1.49 | 2.38 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 24.50 | 2.28 | 3.50 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 130.10 | 8.89 | 13.64 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 58.49 | 11.70 | 14.69 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 30.29 | 4.51 | 11.17 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 59.04 | 6.85 | 10.1 | 4.08% | $33.46 | $27.2 | 8.01% |
Through a thorough examination of NVIDIA, we can discern the following trends:
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The Price to Earnings ratio of 55.24 is 0.94x lower than the industry average, indicating potential undervaluation for the stock.
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With a Price to Book ratio of 52.0, which is 7.59x 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 30.71, surpassing the industry average by 3.04x, 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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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 8.01%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared 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.
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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In terms of the debt-to-equity ratio, NVIDIA has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.16.
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 highly. On the other hand, the high ROE and revenue growth, along with low EBITDA and gross profit, suggest that NVIDIA is efficiently utilizing its resources and experiencing strong growth potential relative to industry competitors.
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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