In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating NVIDIA NVDA in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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 | 57.60 | 54.31 | 32.02 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.08 | 7.92 | 11.92 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 131.87 | 11.61 | 16.17 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 121.77 | 3.92 | 9.26 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 36.84 | 10.47 | 11.58 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 17.26 | 6.52 | 4.47 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 221.04 | 23.37 | 40.19 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 140.53 | 2.42 | 4.38 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 63.56 | 2.98 | 10.86 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 45.22 | 5.57 | 6.45 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 16.70 | 3.34 | 3.97 | 4.75% | $0.63 | $0.8 | -19.21% |
| Monolithic Power Systems Inc | 63.14 | 11.62 | 13.44 | 6.35% | $0.17 | $0.34 | 30.59% |
| STMicroelectronics NV | 10.08 | 1.25 | 1.62 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.35 | 2.22 | 1.16 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 15.92 | 2.61 | 5.16 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.71 | 1.50 | 2.40 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 22.61 | 2.11 | 3.22 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 122.65 | 8.20 | 12.86 | 2.67% | $0.05 | $0.11 | 33.47% |
| Universal Display Corp | 33.31 | 4.96 | 12.28 | 4.29% | $0.08 | $0.13 | 14.57% |
| Lattice Semiconductor Corp | 49.75 | 9.95 | 12.50 | 1.03% | $0.03 | $0.09 | -33.87% |
| Average | 61.7 | 6.45 | 9.68 | 3.47% | $33.37 | $27.12 | 7.5% |
When analyzing NVIDIA, the following trends become evident:
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The Price to Earnings ratio of 57.6 is 0.93x lower than the industry average, indicating potential undervaluation for the stock.
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With a Price to Book ratio of 54.31, which is 8.42x 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 32.02, which is 3.31x 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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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $19.71 Billion, which is 0.59x below the industry average, the company may face 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 0.83x below the industry average, potentially indicating lower revenue after accounting for production costs.
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With a revenue growth of 122.4%, which surpasses the industry average of 7.5%, 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.
In terms of the Debt-to-Equity ratio, NVIDIA stands in comparison with its top 4 peers, leading to the following comparisons:
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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
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers. However, the high ROE, low EBITDA, low gross profit, and high revenue growth suggest that the company is performing well and has strong growth potential within the industry sector.
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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