In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA NVDA against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for 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 | 66.31 | 46.02 | 32.39 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 39.43 | 25.12 | 15.50 | 15.3% | $5.3 | $6.41 | 4.09% |
| Advanced Micro Devices Inc | 363.26 | 5.57 | 13.79 | 1.2% | $1.22 | $2.91 | 10.16% |
| Intel Corp | 107.62 | 1.72 | 3.34 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 22.51 | 7.64 | 4.89 | 12.4% | $3.58 | $5.62 | 4.99% |
| Texas Instruments Inc | 23.66 | 9 | 8.75 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1706 | 28.98 | 49.36 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 34.24 | 2.68 | 8.34 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 19.65 | 6.42 | 5.42 | 9.66% | $0.75 | $1.12 | 8.74% |
| STMicroelectronics NV | 10.23 | 2.46 | 2.49 | 6.69% | $1.5 | $1.95 | -3.21% |
| ON Semiconductor Corp | 16.13 | 4.33 | 4.27 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 29.86 | 2.72 | 4.11 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 21.44 | 2.23 | 1.15 | 3.06% | $28.07 | $24.92 | -18.27% |
| United Microelectronics Corp | 8.72 | 1.74 | 2.57 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 18.60 | 2.70 | 3.63 | 3.76% | $0.37 | $0.51 | -9.61% |
| First Solar Inc | 19.88 | 2.46 | 4.98 | 5.38% | $0.47 | $0.5 | 15.58% |
| Lattice Semiconductor Corp | 41.41 | 15.23 | 14.53 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 41.10 | 5.70 | 14.40 | 4.36% | $0.08 | $0.12 | -6.34% |
| Rambus Inc | 19.67 | 6.15 | 14.24 | 5.87% | $0.07 | $0.1 | -0.12% |
| MACOM Technology Solutions Holdings Inc | 84.93 | 6.22 | 10.13 | 2.63% | $0.03 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 27.61 | 5.36 | 5.69 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 132.8 | 7.22 | 9.58 | 5.83% | $4.05 | $3.91 | -2.51% |
Through an analysis of NVIDIA, we can infer the following trends:
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With a Price to Earnings ratio of 66.31, which is 0.5x 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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The elevated Price to Book ratio of 46.02 relative to the industry average by 6.37x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 32.39, which is 3.38x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 32.23% that is 26.4% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $14.56 Billion, which is 3.6x above the industry average, implying stronger profitability and robust cash flow generation.
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The gross profit of $16.79 Billion is 4.29x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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The company is experiencing remarkable revenue growth, with a rate of 265.28%, outperforming the industry average of -2.51%.
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.
By evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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When considering the debt-to-equity ratio, NVIDIA exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.26, which can be perceived as a positive aspect by investors.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, 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, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry peers, reflecting strong financial performance and growth 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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