In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing NVIDIA NVDA alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer 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 | 39.82 | 36.01 | 22.25 | 30.42% | $25.82 | $28.72 | 77.94% |
| Broadcom Inc | 94.82 | 13.80 | 18.11 | 8.01% | $8.54 | $10.14 | 24.71% |
| Advanced Micro Devices Inc | 73.26 | 2.81 | 5.91 | 1.23% | $1.69 | $3.88 | 35.9% |
| Qualcomm Inc | 14.72 | 5.71 | 3.84 | 10.3% | $3.67 | $6.04 | 16.93% |
| Texas Instruments Inc | 31.21 | 9.13 | 9.43 | 7.08% | $1.85 | $2.31 | 11.14% |
| ARM Holdings PLC | 163.41 | 20.39 | 35.67 | 4.05% | $0.22 | $0.95 | 19.3% |
| Analog Devices Inc | 63.85 | 2.83 | 10.67 | 1.11% | $1.03 | $1.43 | -3.56% |
| Micron Technology Inc | 19.77 | 1.90 | 2.98 | 3.32% | $3.95 | $2.96 | 38.27% |
| Monolithic Power Systems Inc | 16.98 | 9.33 | 12.97 | 4.17% | $0.18 | $0.35 | 39.24% |
| Microchip Technology Inc | 84.35 | 4.29 | 5.49 | -0.87% | $0.21 | $0.56 | -41.89% |
| STMicroelectronics NV | 19.54 | 1.16 | 1.75 | 0.32% | $0.51 | $0.84 | -27.36% |
| ASE Technology Holding Co Ltd | 17.54 | 1.85 | 0.96 | 2.39% | $27.16 | $24.89 | 11.56% |
| United Microelectronics Corp | 11.69 | 1.40 | 2.29 | 2.06% | $23.86 | $15.45 | 5.91% |
| ON Semiconductor Corp | 26.94 | 2.02 | 2.50 | -5.78% | $-0.37 | $0.29 | -22.39% |
| First Solar Inc | 11.03 | 1.70 | 3.28 | 2.59% | $0.35 | $0.34 | 6.35% |
| Skyworks Solutions Inc | 20.58 | 1.60 | 2.67 | 2.54% | $0.31 | $0.44 | -11.07% |
| Credo Technology Group Holding Ltd | 1614.33 | 13.30 | 26.09 | 4.95% | $0.03 | $0.09 | 154.44% |
| Universal Display Corp | 29.79 | 4.10 | 10.53 | 3.93% | $0.08 | $0.13 | 0.62% |
| Lattice Semiconductor Corp | 131.30 | 9.44 | 13.74 | 0.71% | $0.02 | $0.08 | -14.68% |
| Qorvo Inc | 122.93 | 1.96 | 1.83 | 0.93% | $0.14 | $0.39 | -5.11% |
| Average | 135.16 | 5.72 | 8.98 | 2.79% | $3.86 | $3.77 | 12.54% |
By conducting a comprehensive analysis of NVIDIA, the following trends become evident:
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A Price to Earnings ratio of 39.82 significantly below the industry average by 0.29x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 36.01 relative to the industry average by 6.3x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 22.25, surpassing the industry average by 2.48x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 30.42%, which is 27.63% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.82 Billion, which is 6.69x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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The company has higher gross profit of $28.72 Billion, which indicates 7.62x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 77.94%, which surpasses the industry average of 12.54%, the company is demonstrating robust sales expansion and gaining market share.
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.
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 0.13, 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
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its peers, reflecting strong financial performance and growth potential within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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