In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA NVDA vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight 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 | 95.89 | 53.97 | 40.33 | 30.42% | $10.96 | $13.4 | 205.51% |
| Broadcom Inc | 38.36 | 24.69 | 15.08 | 15.3% | $5.3 | $6.41 | 4.09% |
| Advanced Micro Devices Inc | 333.53 | 5.11 | 12.67 | 1.2% | $1.22 | $2.91 | 10.16% |
| Intel Corp | 110.15 | 1.76 | 3.42 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 22.25 | 7.55 | 4.84 | 12.4% | $3.58 | $5.62 | 4.99% |
| Texas Instruments Inc | 22.73 | 8.65 | 8.40 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1616.73 | 27.46 | 46.77 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 28.63 | 2.61 | 7.71 | 1.39% | $1.18 | $1.65 | -16.36% |
| Microchip Technology Inc | 19.28 | 6.30 | 5.32 | 9.66% | $0.75 | $1.12 | 8.74% |
| STMicroelectronics NV | 10.16 | 2.44 | 2.47 | 6.69% | $1.43 | $1.95 | -3.36% |
| ON Semiconductor Corp | 16.49 | 4.43 | 4.37 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 29.67 | 2.71 | 4.08 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 21.12 | 2.20 | 1.13 | 3.06% | $28.07 | $24.92 | -18.27% |
| United Microelectronics Corp | 8.82 | 1.76 | 2.60 | 4.72% | $29.0 | $20.46 | -24.3% |
| First Solar Inc | 36.15 | 2.71 | 5.41 | 4.35% | $0.37 | $0.38 | 27.37% |
| Skyworks Solutions Inc | 18.72 | 2.72 | 3.65 | 3.76% | $0.37 | $0.51 | -9.61% |
| Lattice Semiconductor Corp | 40.26 | 14.86 | 14.12 | 14.98% | $0.05 | $0.12 | -11.23% |
| Universal Display Corp | 43.14 | 6.37 | 15.07 | 3.77% | $0.06 | $0.11 | -12.13% |
| MACOM Technology Solutions Holdings Inc | 82.93 | 6.07 | 9.89 | 2.63% | $0.03 | $0.09 | -15.59% |
| Rambus Inc | 18.72 | 5.83 | 13.55 | 5.87% | $0.06 | $0.1 | 16.08% |
| Allegro Microsystems Inc | 27.42 | 5.32 | 5.66 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 127.26 | 7.08 | 9.31 | 5.76% | $4.04 | $3.91 | -1.5% |
Through a thorough examination of NVIDIA, we can discern the following trends:
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At 95.89, the stock's Price to Earnings ratio is 0.75x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 53.97, which is 7.62x the industry average, NVIDIA might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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With a relatively high Price to Sales ratio of 40.33, which is 4.33x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 30.42% is 24.66% above the industry average, highlighting efficient use of equity to generate profits.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.96 Billion, which is 2.71x above the industry average, indicating stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $13.4 Billion, which indicates 3.43x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 205.51% is notably higher compared to the industry average of -1.5%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative 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.
By considering the Debt-to-Equity ratio, NVIDIA can be compared to its top 4 peers, leading to the following observations:
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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 0.33.
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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
NVIDIA's low PE ratio suggests that it is undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. The high PB and PS ratios indicate that the company's stock price may be overvalued relative to its book value and sales. On the other hand, NVIDIA's high ROE, EBITDA, gross profit, and revenue growth suggest strong financial performance and potential for future growth compared to its industry peers.
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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