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 | 58.15 | 52.32 | 32.07 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.84 | 8.11 | 12.61 | 6.67% | $474.12 | $358.12 | 40.07% |
| Broadcom Inc | 143.89 | 12.67 | 17.64 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 199.39 | 4.79 | 11.79 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 22.08 | 7.80 | 5.22 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 36.27 | 11.10 | 11.93 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 368.73 | 27.61 | 44.71 | 4.07% | $0.23 | $0.91 | 39.11% |
| Micron Technology Inc | 156.97 | 2.70 | 4.89 | 1.99% | $3.63 | $2.74 | 13.79% |
| Analog Devices Inc | 70.03 | 3.28 | 11.96 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 99.67 | 0.89 | 1.85 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 112.43 | 20.97 | 24.37 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 32 | 6.73 | 6.66 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 16.70 | 3.77 | 4.14 | 4.11% | $0.58 | $0.78 | -17.15% |
| First Solar Inc | 22.82 | 3.77 | 7.30 | 4.94% | $0.48 | $0.5 | 24.65% |
| STMicroelectronics NV | 7.76 | 1.49 | 1.80 | 3.51% | $1.31 | $1.15 | -25.29% |
| ASE Technology Holding Co Ltd | 20.93 | 2.39 | 1.24 | 2.62% | $26.08 | $23.07 | 2.91% |
| GLOBALFOUNDRIES Inc | 27.92 | 2 | 3.29 | 1.38% | $0.56 | $0.4 | -11.54% |
| United Microelectronics Corp | 13.30 | 1.98 | 3.11 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 20.68 | 2.52 | 3.69 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 44.58 | 6.46 | 15.88 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 114.41 | 7.56 | 12.16 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 39.98 | 10.72 | 12.05 | 3.28% | $0.04 | $0.08 | -34.72% |
| Cirrus Logic Inc | 22.67 | 3.53 | 3.69 | 2.3% | $0.07 | $0.19 | 17.98% |
| Average | 73.91 | 6.95 | 10.09 | 2.96% | $25.0 | $19.73 | 3.04% |
When conducting a detailed analysis of NVIDIA, the following trends become clear:
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The stock's Price to Earnings ratio of 58.15 is lower than the industry average by 0.79x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 52.32, which is 7.53x 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 Price to Sales ratio of 32.07, which is 3.18x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a higher Return on Equity (ROE) of 30.94%, which is 27.98% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion is 0.79x below the industry average, suggesting potential lower profitability or financial challenges.
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The company has higher gross profit of $22.57 Billion, which indicates 1.14x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 122.4% exceeds the industry average of 3.04%, 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 evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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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 0.17.
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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 market values the company's assets and sales at a premium. On the other hand, the high ROE, gross profit margin, EBITDA, and revenue growth highlight NVIDIA's strong financial performance and growth potential relative to its industry counterparts.
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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