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 | 68.92 | 62.01 | 38.01 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.40 | 8.01 | 12.05 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 133.56 | 11.76 | 16.37 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 123.35 | 3.97 | 9.38 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 37.37 | 10.62 | 11.75 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 18.42 | 6.96 | 4.78 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 219.98 | 23.26 | 39.99 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 139.61 | 2.40 | 4.35 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 63.38 | 2.97 | 10.83 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 45.06 | 5.55 | 6.42 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 66.05 | 12.15 | 14.06 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.54 | 3.31 | 3.93 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.10 | 1.26 | 1.62 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.62 | 2.25 | 1.18 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.14 | 2.64 | 5.23 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 11.03 | 1.54 | 2.47 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 22.64 | 2.11 | 3.23 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 120.46 | 8.05 | 12.63 | 2.67% | $0.05 | $0.11 | 33.47% |
| Universal Display Corp | 33.02 | 4.92 | 12.17 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 47.63 | 9.53 | 11.96 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 61.81 | 6.49 | 9.71 | 3.47% | $33.37 | $27.12 | 7.5% |
Through a thorough examination of NVIDIA, we can discern the following trends:
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The current Price to Earnings ratio of 68.92 is 1.12x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
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With a Price to Book ratio of 62.01, which is 9.55x 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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With a relatively high Price to Sales ratio of 38.01, which is 3.91x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 30.94% is 27.47% above the industry average, highlighting efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion is 0.59x below the industry average, suggesting potential lower profitability or financial challenges.
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The company has lower gross profit of $22.57 Billion, which indicates 0.83x below the industry average. This potentially indicates 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 7.5%, showcasing exceptional sales performance and strong demand for its products or services.
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 assessing NVIDIA against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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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, the PE, PB, and PS ratios are all high compared to industry peers, indicating the stock may be overvalued. On the other hand, the high ROE and revenue growth suggest strong performance relative to competitors. However, the low EBITDA and gross profit levels may raise concerns about the company's operational efficiency and profitability.
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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