In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating NVIDIA NVDA in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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 | 50.96 | 45.95 | 26.31 | 23.01% | $22.58 | $26.67 | 69.18% |
| Broadcom Inc | 100.60 | 18.63 | 23.33 | 7.12% | $8.02 | $10.2 | 20.16% |
| Taiwan Semiconductor Manufacturing Co Ltd | 26.17 | 7.42 | 10.78 | 8.19% | $608.71 | $493.4 | 41.61% |
| Advanced Micro Devices Inc | 103.58 | 3.98 | 8.35 | 1.23% | $1.59 | $3.74 | 35.9% |
| Texas Instruments Inc | 39.32 | 11.50 | 11.89 | 7.08% | $1.85 | $2.31 | 11.14% |
| Qualcomm Inc | 16.25 | 6.31 | 4.24 | 10.3% | $3.67 | $6.04 | 16.93% |
| ARM Holdings PLC | 215.65 | 25.05 | 42.91 | 3.17% | $0.46 | $1.21 | 33.73% |
| Micron Technology Inc | 22.21 | 2.72 | 4.13 | 3.79% | $4.33 | $3.51 | 36.56% |
| Analog Devices Inc | 64.68 | 3.37 | 12.09 | 1.63% | $1.2 | $1.61 | 22.28% |
| Monolithic Power Systems Inc | 19.51 | 10.72 | 14.90 | 4.17% | $0.18 | $0.35 | 39.24% |
| STMicroelectronics NV | 25.77 | 1.54 | 2.31 | 0.32% | $0.51 | $0.84 | -27.36% |
| ASE Technology Holding Co Ltd | 19.67 | 2.08 | 1.07 | 2.39% | $27.16 | $24.89 | 11.56% |
| ON Semiconductor Corp | 36.40 | 2.73 | 3.37 | -5.78% | $-0.37 | $0.29 | -22.39% |
| United Microelectronics Corp | 11.83 | 1.42 | 2.32 | 2.06% | $23.86 | $15.45 | 5.91% |
| First Solar Inc | 14.06 | 2.17 | 4.18 | 2.59% | $0.35 | $0.34 | 6.35% |
| Credo Technology Group Holding Ltd | 319.38 | 23.07 | 38.42 | 5.63% | $0.03 | $0.09 | 25.94% |
| Skyworks Solutions Inc | 29.11 | 1.88 | 3.03 | 1.11% | $0.22 | $0.39 | -8.87% |
| Qorvo Inc | 146.40 | 2.32 | 2.18 | 0.93% | $0.11 | $0.37 | -7.6% |
| Universal Display Corp | 32.11 | 4.42 | 11.35 | 3.93% | $0.08 | $0.13 | 0.62% |
| Rambus Inc | 33.53 | 5.93 | 11.50 | 5.29% | $0.08 | $0.13 | 41.4% |
| Average | 67.17 | 7.22 | 11.18 | 3.43% | $35.9 | $29.75 | 14.9% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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The stock's Price to Earnings ratio of 50.96 is lower than the industry average by 0.76x, suggesting potential value in the eyes of market participants.
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The elevated Price to Book ratio of 45.95 relative to the industry average by 6.36x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 26.31, which is 2.35x 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 23.01%, which is 19.58% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.58 Billion, which is 0.63x below the industry average, potentially indicating lower profitability or financial challenges.
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With lower gross profit of $26.67 Billion, which indicates 0.9x below the industry average, the company may experience lower revenue after accounting for production costs.
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With a revenue growth of 69.18%, which surpasses the industry average of 14.9%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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 NVIDIA against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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NVIDIA exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.12.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
For NVIDIA, 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, NVIDIA outperforms with a high ratio, reflecting efficient use of shareholder funds. However, the low EBITDA and gross profit levels may indicate operational challenges. The high revenue growth rate signals a promising future outlook for NVIDIA within the Semiconductors & Semiconductor Equipment industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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