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 | 65.83 | 59.22 | 36.30 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 35.13 | 8.24 | 13.49 | 8.36% | $360.77 | $439.35 | 38.95% |
| Broadcom Inc | 138.41 | 12.19 | 16.97 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 182.67 | 4.39 | 10.80 | 0.47% | $1.12 | $2.86 | 8.88% |
| Texas Instruments Inc | 35.81 | 10.91 | 11.77 | 7.9% | $1.76 | $2.21 | 8.61% |
| Qualcomm Inc | 21.50 | 7.59 | 5.08 | 8.67% | $2.87 | $5.22 | 11.15% |
| ARM Holdings PLC | 348.61 | 26.10 | 42.27 | 4.07% | $0.23 | $0.91 | 39.11% |
| Micron Technology Inc | 152.64 | 2.63 | 4.76 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 69.18 | 3.24 | 11.82 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 93.08 | 0.83 | 1.72 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 107.15 | 19.98 | 23.23 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 30.22 | 6.35 | 6.29 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 15.96 | 3.60 | 3.95 | 4.11% | $0.58 | $0.78 | -17.15% |
| STMicroelectronics NV | 7.41 | 1.42 | 1.72 | 3.51% | $1.31 | $1.15 | -25.29% |
| ASE Technology Holding Co Ltd | 20.29 | 2.32 | 1.20 | 2.62% | $26.08 | $23.07 | 2.91% |
| GLOBALFOUNDRIES Inc | 26.76 | 1.92 | 3.16 | 1.38% | $0.56 | $0.4 | -11.54% |
| First Solar Inc | 17.50 | 2.89 | 5.60 | 4.94% | $0.48 | $0.5 | 24.65% |
| United Microelectronics Corp | 11.71 | 1.74 | 2.74 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 19.64 | 2.40 | 3.51 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 43.15 | 6.25 | 15.37 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 118.16 | 7.81 | 12.55 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 39.61 | 10.62 | 11.93 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 73.08 | 6.83 | 10.0 | 3.13% | $20.79 | $24.53 | 7.21% |
When analyzing NVIDIA, the following trends become evident:
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A Price to Earnings ratio of 65.83 significantly below the industry average by 0.9x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 59.22 relative to the industry average by 8.67x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 36.3, which is 3.63x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a higher Return on Equity (ROE) of 30.94%, which is 27.81% 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 0.95x below the industry average. This potentially indicates lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $22.57 Billion, which indicates 0.92x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of 122.4% is notably higher compared to the industry average of 7.21%, showcasing exceptional sales performance and strong demand for its products or services.
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 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
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 more highly. On the other hand, the high ROE, revenue growth, and low EBITDA and gross profit ratios suggest that NVIDIA is generating strong returns on equity and experiencing significant revenue growth, despite lower profitability and operating income.
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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