In the fast-paced 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 NVIDIA NVDA in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial 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.
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 | 38.62 | 34.92 | 21.58 | 30.42% | $25.82 | $28.72 | 77.94% |
| Broadcom Inc | 92.63 | 13.48 | 17.69 | 8.01% | $8.54 | $10.14 | 24.71% |
| Advanced Micro Devices Inc | 98.62 | 2.78 | 6.26 | 0.84% | $1.69 | $3.88 | 24.16% |
| Qualcomm Inc | 14.28 | 5.54 | 3.72 | 10.3% | $3.67 | $6.04 | 16.93% |
| Texas Instruments Inc | 30.51 | 8.92 | 9.22 | 7.08% | $1.85 | $2.31 | 11.14% |
| ARM Holdings PLC | 161.11 | 20.10 | 35.17 | 4.05% | $0.22 | $0.95 | 19.3% |
| Analog Devices Inc | 62.49 | 2.77 | 10.45 | 1.11% | $1.03 | $1.43 | -3.56% |
| Micron Technology Inc | 19.26 | 1.85 | 2.90 | 3.32% | $3.95 | $2.96 | 38.27% |
| Monolithic Power Systems Inc | 16.62 | 9.13 | 12.69 | 4.17% | $0.18 | $0.35 | 39.24% |
| Microchip Technology Inc | 82.88 | 4.21 | 5.39 | -0.87% | $0.21 | $0.56 | -41.89% |
| STMicroelectronics NV | 19.11 | 1.14 | 1.72 | 0.32% | $0.51 | $0.84 | -27.36% |
| ASE Technology Holding Co Ltd | 18.27 | 1.93 | 1 | 2.39% | $27.16 | $24.89 | 11.56% |
| United Microelectronics Corp | 12.19 | 1.46 | 2.39 | 2.06% | $23.86 | $15.45 | 5.91% |
| ON Semiconductor Corp | 26.74 | 2 | 2.48 | -5.78% | $-0.37 | $0.29 | -22.39% |
| First Solar Inc | 10.77 | 1.66 | 3.20 | 2.59% | $0.35 | $0.34 | 6.35% |
| Skyworks Solutions Inc | 20.31 | 1.58 | 2.64 | 2.54% | $0.31 | $0.44 | -11.07% |
| Credo Technology Group Holding Ltd | 1589 | 13.09 | 25.68 | 4.95% | $0.03 | $0.09 | 154.44% |
| Universal Display Corp | 29.22 | 4.03 | 10.33 | 3.93% | $0.08 | $0.13 | 0.62% |
| Qorvo Inc | 121.22 | 1.94 | 1.80 | 0.93% | $0.14 | $0.39 | -5.11% |
| Lattice Semiconductor Corp | 128.62 | 9.24 | 13.46 | 0.71% | $0.02 | $0.08 | -14.68% |
| Average | 134.41 | 5.62 | 8.85 | 2.77% | $3.86 | $3.77 | 11.92% |
By carefully studying NVIDIA, we can deduce the following trends:
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The Price to Earnings ratio of 38.62 is 0.29x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 34.92 relative to the industry average by 6.21x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 21.58, which is 2.44x 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 company has a higher Return on Equity (ROE) of 30.42%, which is 27.65% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.82 Billion, which is 6.69x above the industry average, indicating stronger profitability and robust cash flow generation.
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With higher gross profit of $28.72 Billion, which indicates 7.62x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company is experiencing remarkable revenue growth, with a rate of 77.94%, outperforming the industry average of 11.92%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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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When comparing the debt-to-equity ratio, NVIDIA is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.13.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry peers, reflecting robust financial health and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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