Exploring The Competitive Space: Lam Research Versus Industry Peers In Semiconductors & Semiconductor Equipment

In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Lam Research LRCX and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within 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 33.89 15.04 8.61 11.89% $1.23 $1.8 -1.96%
ASML Holding NV 48.51 25.06 13.22 8.98% $1.61 $2.7 -21.59%
Applied Materials Inc 24.39 9.66 6.72 9.67% $2.15 $3.15 0.24%
KLA Corp 39.30 32.65 10.69 19.6% $0.88 $1.37 -2.99%
Teradyne Inc 53.09 8.52 8.58 2.53% $0.1 $0.34 -2.87%
Entegris Inc 60.47 5.56 5.68 1.32% $0.2 $0.35 -16.41%
Enphase Energy Inc 66.89 19.14 9.99 -1.69% $0.01 $0.12 -63.73%
Onto Innovation Inc 74.37 5.78 12.22 2.66% $0.06 $0.12 14.9%
Amkor Technology Inc 20.76 1.94 1.22 1.48% $0.23 $0.2 -7.21%
FormFactor Inc 40.58 4.44 6.28 2.38% $0.01 $0.06 0.76%
Axcelis Technologies Inc 14.70 4.02 3.26 5.84% $0.06 $0.12 -0.65%
Photronics Inc 12.27 1.62 1.85 3.52% $0.08 $0.08 0.31%
PDF Solutions Inc 576 5.89 8.07 -0.17% $-0.0 $0.03 1.35%
ACM Research Inc 15.73 1.60 2.11 2.23% $0.03 $0.08 104.95%
Aehr Test Systems 21.85 3.80 4.69 -1.69% $-0.0 $0.0 -56.04%
inTest Corp 15.63 1.16 0.92 0.68% $0.0 $0.01 -6.56%
Average 72.3 8.72 6.37 3.82% $0.36 $0.58 -3.7%

Through a meticulous analysis of Lam Research, we can observe the following trends:

  • At 33.89, the stock's Price to Earnings ratio is 0.47x less than the industry average, suggesting favorable growth potential.

  • The elevated Price to Book ratio of 15.04 relative to the industry average by 1.72x suggests company might be overvalued based on its book value.

  • The stock's relatively high Price to Sales ratio of 8.61, surpassing the industry average by 1.35x, may indicate an aspect of overvaluation in terms of sales performance.

  • With a Return on Equity (ROE) of 11.89% that is 8.07% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

  • The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.23 Billion is 3.42x above the industry average, highlighting stronger profitability and robust cash flow generation.

  • The company has higher gross profit of $1.8 Billion, which indicates 3.1x above the industry average, indicating stronger profitability and higher earnings from its core operations.

  • With a revenue growth of -1.96%, which surpasses the industry average of -3.7%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.

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 Lam Research against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

  • As Lam Research is in the middle of the list in terms of the debt-to-equity ratio, it suggests that the company has a moderate debt-to-equity ratio of 0.62 compared to the other companies.

  • This position indicates a relatively balanced financial structure, where the company maintains a reasonable level of debt while also leveraging equity for financing its operations.

Key Takeaways

For Lam Research, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. Lam Research's high ROE, EBITDA, gross profit, and revenue growth outperform industry peers, reflecting robust financial performance and growth prospects in the semiconductor sector.

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

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