In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess 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 | 83.15 | 46.80 | 34.97 | 30.42% | $10.96 | $13.4 | 205.51% |
| Broadcom Inc | 36.38 | 23.41 | 14.30 | 15.3% | $5.3 | $6.41 | 4.09% |
| Advanced Micro Devices Inc | 321.64 | 4.93 | 12.21 | 1.2% | $1.22 | $2.91 | 6.34% |
| Intel Corp | 108.45 | 1.74 | 3.37 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 20.12 | 6.83 | 4.37 | 7.05% | $3.58 | $5.62 | -24.26% |
| Texas Instruments Inc | 22.59 | 8.59 | 8.35 | 8.18% | $1.98 | $2.43 | -10.04% |
| Analog Devices Inc | 29.31 | 2.68 | 7.89 | 1.39% | $1.18 | $1.65 | -16.36% |
| ARM Holdings PLC | 401.66 | 15.15 | 25.48 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 20 | 6.54 | 5.52 | 9.66% | $1.1 | $1.53 | 8.74% |
| STMicroelectronics NV | 9.93 | 2.39 | 2.42 | 6.69% | $1.43 | $1.95 | -3.36% |
| GLOBALFOUNDRIES Inc | 21.52 | 2.80 | 3.98 | 2.34% | $0.64 | $0.53 | -10.7% |
| ON Semiconductor Corp | 14.15 | 4.04 | 3.78 | 8.05% | $0.87 | $1.03 | -0.54% |
| ASE Technology Holding Co Ltd | 19.71 | 2.05 | 1.06 | 3.06% | $28.07 | $24.92 | -18.27% |
| United Microelectronics Corp | 8.64 | 1.72 | 2.54 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 18.26 | 2.65 | 3.56 | 3.76% | $0.37 | $0.51 | -1.42% |
| First Solar Inc | 33.47 | 2.51 | 5.01 | 4.35% | $0.37 | $0.38 | 27.37% |
| Lattice Semiconductor Corp | 40.22 | 13.48 | 11.52 | 8.96% | $0.07 | $0.13 | 11.4% |
| Universal Display Corp | 39.68 | 5.86 | 13.86 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 26 | 7.67 | 16.29 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 65.66 | 6.39 | 9.27 | 2.63% | $0.05 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 22.42 | 5.11 | 5.30 | 6.18% | $0.09 | $0.16 | 15.92% |
| Average | 63.99 | 6.33 | 8.0 | 5.41% | $4.05 | $3.94 | -1.58% |
By thoroughly analyzing NVIDIA, we can discern the following trends:
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The current Price to Earnings ratio of 83.15 is 1.3x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
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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 46.8 which exceeds the industry average by 7.39x.
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The stock's relatively high Price to Sales ratio of 34.97, surpassing the industry average by 4.37x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 30.42% is 25.01% above the industry average, highlighting efficient use of equity to generate profits.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.96 Billion, which is 2.71x above the industry average, indicating stronger profitability and robust cash flow generation.
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With higher gross profit of $13.4 Billion, which indicates 3.4x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 205.51% exceeds the industry average of -1.58%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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 demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.33, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
NVIDIA's high PE, PB, and PS ratios indicate that the company is trading at a premium compared to its peers in the Semiconductors & Semiconductor Equipment industry. This suggests that investors are willing to pay a higher price for NVIDIA's earnings, book value, and sales. On the other hand, NVIDIA's high ROE, EBITDA, gross profit, and revenue growth indicate that the company is performing well and generating strong returns. These metrics highlight NVIDIA's ability to efficiently utilize its resources and drive growth in its business.
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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