Analyzing Lam Research In Comparison To Competitors In Semiconductors & Semiconductor Equipment Industry

Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Lam Research LRCX in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical 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.

Lam Research Background

Lam Research is one of the largest semiconductor wafer fabrication equipment, or WFE, manufacturers in the world. It specializes in the market segments of deposition and etch, which entail the buildup of layers on a semiconductor and the subsequent selective removal of patterns from each layer. Lam holds the top market share in etch and holds the clear cut second share in deposition. It is more exposed to memory chipmakers for DRAM and NAND chips. It counts as top customers the largest chipmakers in the world, including TSMC, Samsung, Intel, and Micron.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Lam Research Corp 37.32 15.43 9.04 11.73% $1.22 $1.76 -28.79%
ASML Holding NV 45.50 26.57 12.95 16.1% $2.8 $3.72 12.55%
Applied Materials Inc 24.59 9.97 6.65 11.95% $2.45 $3.2 -0.47%
KLA Corp 34.99 30.71 9.82 19.31% $0.86 $1.51 -16.66%
Entegris Inc 114.09 6.05 5.86 1.12% $0.19 $0.34 -14.14%
Teradyne Inc 39.50 6.53 6.62 4.71% $0.17 $0.38 -8.37%
Enphase Energy Inc 37.43 15.94 7.21 2.09% $0.04 $0.15 -58.25%
Onto Innovation Inc 77.19 5.38 11.48 1.77% $0.04 $0.11 -13.59%
Amkor Technology Inc 21.46 1.94 1.19 3.01% $0.33 $0.28 -8.1%
SolarEdge Technologies Inc 111.58 1.59 1.29 -6.62% $-0.18 $-0.06 -64.52%
FormFactor Inc 44.76 4 5.54 8.67% $0.09 $0.07 1.31%
Axcelis Technologies Inc 14.10 3.95 3.07 8.53% $0.09 $0.14 16.63%
Kulicke & Soffa Industries Inc 54.04 2.36 3.78 0.8% $0.02 $0.08 -2.86%
ACM Research Inc 26.91 2.49 3.63 2.37% $0.03 $0.08 56.92%
Photronics Inc 12.78 1.76 1.96 2.62% $0.07 $0.08 2.48%
Cohu Inc 54.95 1.61 2.45 -0.21% $0.01 $0.07 -28.19%
PDF Solutions Inc 410.75 5.54 7.72 0.39% $0.0 $0.03 1.49%
Aehr Test Systems 16.41 3.86 4.23 7.28% $0.01 $0.01 44.66%
Average 67.12 7.66 5.61 4.93% $0.41 $0.6 -4.65%

When analyzing Lam Research, the following trends become evident:

  • The Price to Earnings ratio of 37.32 is 0.56x lower than the industry average, indicating potential undervaluation for the stock.

  • The elevated Price to Book ratio of 15.43 relative to the industry average by 2.01x suggests company might be overvalued based on its book value.

  • With a relatively high Price to Sales ratio of 9.04, which is 1.61x the industry average, the stock might be considered overvalued based on sales performance.

  • The Return on Equity (ROE) of 11.73% is 6.8% above the industry average, highlighting efficient use of equity to generate profits.

  • Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.22 Billion, which is 2.98x above the industry average, indicating stronger profitability and robust cash flow generation.

  • The gross profit of $1.76 Billion is 2.93x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

  • The company's revenue growth of -28.79% is significantly lower compared to the industry average of -4.65%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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.

By analyzing Lam Research in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

  • When evaluating the debt-to-equity ratio, Lam Research is in the middle position among its top 4 peers.

  • The company maintains a moderate level of debt relative to its equity with a debt-to-equity ratio of 0.61, suggesting a relatively balanced financial structure.

Key Takeaways

The PE, PB, and PS ratios for Lam Research indicate that it may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, its high ROE, EBITDA, and gross profit suggest strong financial performance relative to industry standards. The low revenue growth rate may be a concern for its future prospects.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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