In today’s rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA NVDA against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 | 57.42 | 51.77 | 29.64 | 23.01% | $22.58 | $26.67 | 69.18% |
| Broadcom Inc | 107.30 | 19.87 | 24.88 | 7.12% | $8.02 | $10.2 | 20.16% |
| Taiwan Semiconductor Manufacturing Co Ltd | 25.35 | 8 | 10.77 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 100.46 | 4.56 | 9.25 | 1.48% | $0.72 | $3.06 | 31.71% |
| Texas Instruments Inc | 37.67 | 11.42 | 11.33 | 7.85% | $2.09 | $2.58 | 16.38% |
| Qualcomm Inc | 15.25 | 6.27 | 4.08 | 9.71% | $3.52 | $5.76 | 10.35% |
| ARM Holdings PLC | 208.97 | 20.85 | 35.62 | 1.88% | $0.17 | $1.02 | 12.14% |
| Micron Technology Inc | 21.20 | 2.60 | 3.94 | 3.79% | $4.33 | $3.51 | 36.56% |
| Analog Devices Inc | 64.17 | 3.64 | 12.09 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 27.99 | 6.19 | 4.95 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 22.08 | 11.88 | 16.05 | 4.01% | $0.18 | $0.37 | 30.97% |
| STMicroelectronics NV | 58.55 | 1.31 | 2.17 | -0.55% | $0.8 | $0.93 | -14.42% |
| First Solar Inc | 17.29 | 2.54 | 5.01 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 49.38 | 2.67 | 3.44 | 2.13% | $0.38 | $0.55 | -15.36% |
| ASE Technology Holding Co Ltd | 19.87 | 2.21 | 1.06 | 2.49% | $26.99 | $25.69 | 7.5% |
| Credo Technology Group Holding Ltd | 393.24 | 28.72 | 47.30 | 5.63% | $0.04 | $0.11 | 179.73% |
| United Microelectronics Corp | 12.29 | 1.53 | 2.14 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 30.79 | 2.03 | 3.05 | 1.81% | $0.23 | $0.4 | 6.57% |
| Lattice Semiconductor Corp | 278.96 | 12.78 | 18.11 | 0.42% | $0.02 | $0.08 | -0.08% |
| Qorvo Inc | 109.35 | 2.51 | 2.41 | 0.75% | $0.12 | $0.33 | -7.66% |
| Average | 84.22 | 7.98 | 11.46 | 3.68% | $40.01 | $32.77 | 20.18% |
When conducting a detailed analysis of NVIDIA, the following trends become clear:
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At 57.42, the stock’s Price to Earnings ratio is 0.68x less than the industry average, suggesting favorable growth potential.
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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 51.77 which exceeds the industry average by 6.49x.
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The Price to Sales ratio of 29.64, which is 2.59x 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 19.33% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.58 Billion, which is 0.56x below the industry average, the company may face lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $26.67 Billion, which indicates 0.81x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company is experiencing remarkable revenue growth, with a rate of 69.18%, outperforming the industry average of 20.18%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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 evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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Among its top 4 peers, NVIDIA has a stronger financial position with a lower debt-to-equity ratio of 0.12.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
The low P/E ratio suggests that NVIDIA may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the market values the company’s assets and sales more highly. On the other hand, the high ROE, low EBITDA, low gross profit, and high revenue growth suggest that NVIDIA is generating strong returns on equity and experiencing significant growth in revenue, despite lower earnings and gross profit margins.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
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