In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA NVDA against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key 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 | 63.21 | 56.87 | 34.86 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.12 | 8.18 | 12.72 | 6.67% | $474.12 | $358.12 | 40.07% |
| Broadcom Inc | 149.97 | 13.21 | 18.39 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 195.45 | 4.70 | 11.55 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 21.55 | 7.61 | 5.09 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 35.09 | 10.74 | 11.54 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 369.10 | 27.64 | 44.75 | 4.07% | $0.23 | $0.91 | 39.11% |
| Micron Technology Inc | 150.96 | 2.60 | 4.70 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 69.48 | 3.25 | 11.87 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 96.75 | 0.86 | 1.79 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 110.72 | 20.65 | 24 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 30.81 | 6.48 | 6.41 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 16.02 | 3.61 | 3.97 | 4.11% | $0.58 | $0.78 | -17.15% |
| STMicroelectronics NV | 7.35 | 1.41 | 1.71 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 27.62 | 1.98 | 3.26 | 1.38% | $0.56 | $0.4 | -11.54% |
| First Solar Inc | 18.30 | 3.02 | 5.85 | 4.94% | $0.48 | $0.5 | 24.65% |
| ASE Technology Holding Co Ltd | 19.60 | 2.24 | 1.16 | 2.62% | $26.08 | $23.07 | 2.91% |
| United Microelectronics Corp | 12.27 | 1.82 | 2.87 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 19.93 | 2.43 | 3.56 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 43.71 | 6.33 | 15.57 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 115.09 | 7.61 | 12.23 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 37.72 | 10.11 | 11.36 | 3.28% | $0.04 | $0.08 | -34.72% |
| Impinj Inc | 799.93 | 55.76 | 21.62 | 9.82% | $0.01 | $0.06 | 19.2% |
| Average | 108.21 | 9.19 | 10.73 | 3.3% | $24.99 | $19.72 | 6.7% |
After examining NVIDIA, the following trends can be inferred:
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At 63.21, the stock's Price to Earnings ratio is 0.58x less than the industry average, suggesting favorable growth potential.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 56.87 which exceeds the industry average by 6.19x.
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The stock's relatively high Price to Sales ratio of 34.86, surpassing the industry average by 3.25x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 30.94%, which is 27.64% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion, which is 0.79x below the industry average. This potentially indicates lower profitability or financial challenges.
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The gross profit of $22.57 Billion is 1.14x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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With a revenue growth of 122.4%, which surpasses the industry average of 6.7%, the company is demonstrating robust sales expansion and gaining market share.
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.
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 exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.17.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for 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. A high ROE reflects efficient use of shareholder funds, while low EBITDA may indicate lower operating cash flow. The high gross profit margin signifies strong profitability, and high revenue growth indicates a positive sales trend compared to 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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