Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA NVDA in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical 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 | 65.33 | 36.77 | 27.48 | 30.42% | $10.96 | $13.4 | 205.51% |
| Taiwan Semiconductor Manufacturing Co Ltd | 19.23 | 5.01 | 7.75 | 6.46% | $392.33 | $296.64 | -10.83% |
| Broadcom Inc | 34.03 | 21.90 | 13.38 | 15.3% | $5.3 | $6.41 | 4.09% |
| Advanced Micro Devices Inc | 1352.36 | 4.37 | 10.92 | 0.54% | $1.13 | $2.75 | 4.22% |
| Qualcomm Inc | 22.37 | 7.52 | 4.59 | 7.05% | $2.06 | $4.75 | -24.26% |
| Texas Instruments Inc | 22.24 | 9.38 | 8.69 | 10.44% | $2.34 | $2.81 | -13.53% |
| Analog Devices Inc | 30.57 | 2.79 | 8.23 | 1.39% | $1.18 | $1.65 | -16.36% |
| ARM Holdings PLC | 441.25 | 16.64 | 27.99 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 19.92 | 7.05 | 5.61 | 9.66% | $1.1 | $1.53 | 8.74% |
| STMicroelectronics NV | 10.82 | 2.94 | 2.72 | 7.28% | $1.69 | $2.11 | 2.55% |
| ON Semiconductor Corp | 17.13 | 4.89 | 4.58 | 8.05% | $0.87 | $1.03 | -0.54% |
| GLOBALFOUNDRIES Inc | 24.22 | 3.15 | 4.47 | 2.34% | $0.64 | $0.53 | -10.7% |
| United Microelectronics Corp | 9.43 | 1.88 | 2.78 | 4.72% | $29.0 | $20.46 | -24.3% |
| ASE Technology Holding Co Ltd | 17.12 | 2.13 | 1.05 | 3.06% | $28.07 | $24.92 | -18.27% |
| First Solar Inc | 39.19 | 2.94 | 5.87 | 4.35% | $0.37 | $0.38 | 27.37% |
| Skyworks Solutions Inc | 18.58 | 3 | 3.83 | 4.09% | $0.4 | $0.48 | -13.37% |
| Lattice Semiconductor Corp | 46.68 | 15.64 | 13.37 | 8.96% | $0.07 | $0.13 | 11.4% |
| Universal Display Corp | 44.65 | 6.59 | 15.60 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 26.18 | 7.72 | 16.40 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 73.80 | 7.17 | 10.42 | 2.63% | $0.05 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 23.72 | 5.41 | 5.61 | 6.18% | $0.09 | $0.16 | 15.92% |
| Average | 114.67 | 6.91 | 8.69 | 5.73% | $23.34 | $18.39 | -3.19% |
Upon analyzing NVIDIA, the following trends can be observed:
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The stock's Price to Earnings ratio of 65.33 is lower than the industry average by 0.57x, suggesting potential value in the eyes of market participants.
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The elevated Price to Book ratio of 36.77 relative to the industry average by 5.32x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 27.48, surpassing the industry average by 3.16x, 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 24.69% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.96 Billion is 0.47x below the industry average, suggesting potential lower profitability or financial challenges.
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The company has lower gross profit of $13.4 Billion, which indicates 0.73x below the industry average. This potentially indicates lower revenue after accounting for production costs.
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The company's revenue growth of 205.51% is notably higher compared to the industry average of -3.19%, showcasing exceptional sales performance and strong demand for its products or services.
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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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 0.33, 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
NVIDIA's low PE ratio suggests that it is undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. The high PB ratio indicates that investors are willing to pay a premium for the company's assets. Similarly, the high PS ratio suggests that investors are willing to pay a higher price for each unit of the company's sales. On the other hand, NVIDIA's high ROE indicates that it is generating strong returns on shareholder equity. The low EBITDA and gross profit ratios suggest that the company may have lower profitability compared to its peers. However, the high revenue growth indicates that NVIDIA is experiencing strong sales growth.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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