In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA NVDA against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for 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 | 58.06 | 52.36 | 29.98 | 23.01% | $22.58 | $26.67 | 69.18% |
| Broadcom Inc | 108.66 | 20.12 | 25.20 | 7.12% | $8.02 | $10.2 | 20.16% |
| Advanced Micro Devices Inc | 129.04 | 4.95 | 10.41 | 1.23% | $1.59 | $3.74 | 35.9% |
| Texas Instruments Inc | 33.41 | 10.13 | 10.05 | 7.85% | $2.09 | $2.58 | 16.38% |
| Qualcomm Inc | 14.24 | 5.85 | 3.81 | 9.71% | $3.52 | $5.76 | 10.35% |
| ARM Holdings PLC | 212.20 | 21.17 | 36.17 | 1.88% | $0.17 | $1.02 | 12.14% |
| Micron Technology Inc | 19.42 | 2.38 | 3.61 | 3.79% | $4.33 | $3.51 | 36.56% |
| Analog Devices Inc | 60.43 | 3.15 | 11.29 | 1.63% | $1.2 | $1.61 | 22.28% |
| STMicroelectronics NV | 36.41 | 1.26 | 1.94 | -0.55% | $0.46 | $0.93 | -14.42% |
| ASE Technology Holding Co Ltd | 19.86 | 2.21 | 1.06 | 2.49% | $26.99 | $25.69 | 7.5% |
| ON Semiconductor Corp | 45.69 | 2.52 | 3.18 | -5.78% | $-0.37 | $0.29 | -22.39% |
| Credo Technology Group Holding Ltd | 395.52 | 28.88 | 47.57 | 5.63% | $0.04 | $0.11 | 179.73% |
| First Solar Inc | 15.68 | 2.30 | 4.54 | 4.09% | $0.49 | $0.5 | 8.58% |
| United Microelectronics Corp | 12.20 | 1.52 | 2.12 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 26.54 | 1.72 | 2.77 | 1.11% | $0.22 | $0.39 | -8.87% |
| Rambus Inc | 35.89 | 6.64 | 12.73 | 4.85% | $0.08 | $0.14 | 30.33% |
| Qorvo Inc | 100.20 | 2.30 | 2.21 | 0.75% | $0.12 | $0.33 | -7.66% |
| Universal Display Corp | 27.98 | 3.97 | 10.32 | 3.99% | $0.08 | $0.13 | 8.38% |
| Average | 76.08 | 7.12 | 11.12 | 3.07% | $4.35 | $4.34 | 19.91% |
After a detailed analysis of NVIDIA, the following trends become apparent:
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A Price to Earnings ratio of 58.06 significantly below the industry average by 0.76x suggests undervaluation. This can make the stock appealing for those seeking growth.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 52.36 which exceeds the industry average by 7.35x.
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The Price to Sales ratio of 29.98, which is 2.7x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 23.01% that is 19.94% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.58 Billion, which is 5.19x above the industry average, implying stronger profitability and robust cash flow generation.
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The company has higher gross profit of $26.67 Billion, which indicates 6.15x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 69.18% exceeds the industry average of 19.91%, indicating strong sales performance and market outperformance.
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.
In terms of the Debt-to-Equity ratio, NVIDIA can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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In terms of the debt-to-equity ratio, NVIDIA has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.12.
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, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry peers, reflecting strong financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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