In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing NVIDIA NVDA alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 | 75.95 | 52.70 | 37.09 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 51.37 | 9.11 | 15.53 | 2.81% | $4.61 | $7.38 | 34.17% |
| Advanced Micro Devices Inc | 321.66 | 4.93 | 12.21 | 1.2% | $1.22 | $2.91 | 10.16% |
| Qualcomm Inc | 24.98 | 8.48 | 5.43 | 12.4% | $3.58 | $5.62 | 4.99% |
| Intel Corp | 94 | 1.52 | 2.92 | 2.57% | $5.57 | $7.05 | 9.71% |
| Texas Instruments Inc | 24.21 | 9.22 | 8.95 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1586.01 | 26.94 | 45.89 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 35.47 | 2.77 | 8.63 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 20.86 | 6.81 | 5.75 | 5.97% | $0.75 | $1.12 | -18.6% |
| STMicroelectronics NV | 9.57 | 2.30 | 2.33 | 6.69% | $1.5 | $1.95 | -3.21% |
| Monolithic Power Systems Inc | 78.09 | 16.24 | 18.32 | 4.85% | $0.12 | $0.25 | -1.3% |
| ON Semiconductor Corp | 14.44 | 3.90 | 3.82 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 27.97 | 2.55 | 3.85 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 22.31 | 2.63 | 1.34 | 4.45% | $29.8 | $25.76 | -9.49% |
| United Microelectronics Corp | 10.84 | 1.83 | 2.97 | 3.72% | $25.78 | $17.81 | -3.7% |
| First Solar Inc | 23.83 | 2.95 | 5.97 | 5.38% | $0.47 | $0.5 | 15.58% |
| Skyworks Solutions Inc | 18.50 | 2.69 | 3.60 | 3.76% | $0.37 | $0.51 | -9.61% |
| Lattice Semiconductor Corp | 41.98 | 15.44 | 14.73 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 38.75 | 5.38 | 13.57 | 4.36% | $0.08 | $0.12 | -6.34% |
| MACOM Technology Solutions Holdings Inc | 98.42 | 7.20 | 11.74 | 1.27% | $0.03 | $0.09 | -12.75% |
| Rambus Inc | 20.71 | 6.52 | 14.99 | 5.87% | $0.07 | $0.1 | -0.12% |
| Average | 128.2 | 6.97 | 10.13 | 5.07% | $3.94 | $3.87 | -0.95% |
By conducting a comprehensive analysis of NVIDIA, the following trends become evident:
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The Price to Earnings ratio of 75.95 is 0.59x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 52.7 relative to the industry average by 7.56x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 37.09, which is 3.66x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 32.23% is 27.16% above the industry average, highlighting efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $14.56 Billion, which is 3.7x above the industry average, implying stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $16.79 Billion, which indicates 4.34x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 265.28% is notably higher compared to the industry average of -0.95%, 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 comparing NVIDIA with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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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 0.26.
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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. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA demonstrates strong performance metrics, outperforming its industry counterparts. This suggests that NVIDIA may be a favorable investment option based on its financial indicators.
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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