In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 | 52.30 | 29.95 | 23.01% | $22.58 | $26.67 | 69.18% |
| Broadcom Inc | 107.38 | 19.89 | 24.90 | 7.12% | $8.02 | $10.2 | 20.16% |
| Taiwan Semiconductor Manufacturing Co Ltd | 25.83 | 8.15 | 10.97 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 97.82 | 4.44 | 9.01 | 1.48% | $0.72 | $3.06 | 31.71% |
| Texas Instruments Inc | 37.65 | 11.42 | 11.33 | 7.85% | $2.09 | $2.58 | 16.38% |
| Qualcomm Inc | 15.10 | 6.20 | 4.04 | 9.71% | $3.52 | $5.76 | 10.35% |
| ARM Holdings PLC | 208.76 | 20.83 | 35.58 | 1.88% | $0.17 | $1.02 | 12.14% |
| Micron Technology Inc | 20.98 | 2.57 | 3.90 | 3.79% | $4.33 | $3.51 | 36.56% |
| Analog Devices Inc | 64.76 | 3.67 | 12.20 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 28.21 | 6.24 | 4.99 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 21.92 | 11.79 | 15.93 | 4.01% | $0.18 | $0.37 | 30.97% |
| STMicroelectronics NV | 58.11 | 1.30 | 2.16 | -0.05% | $0.62 | $0.65 | -14.42% |
| ASE Technology Holding Co Ltd | 20.07 | 2.23 | 1.07 | 2.49% | $26.99 | $25.69 | 7.5% |
| First Solar Inc | 17.05 | 2.50 | 4.94 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 48.52 | 2.62 | 3.38 | 2.13% | $0.38 | $0.55 | -15.36% |
| Credo Technology Group Holding Ltd | 397.97 | 29.06 | 47.87 | 5.63% | $0.04 | $0.11 | 179.73% |
| United Microelectronics Corp | 12.18 | 1.52 | 2.12 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 30.58 | 2.02 | 3.03 | 1.81% | $0.23 | $0.4 | 6.57% |
| Lattice Semiconductor Corp | 281.39 | 12.90 | 18.27 | 0.42% | $0.02 | $0.08 | -0.08% |
| Qorvo Inc | 108.38 | 2.48 | 2.39 | 0.75% | $0.12 | $0.33 | -7.66% |
| Average | 84.35 | 7.99 | 11.48 | 3.71% | $40.0 | $32.76 | 20.18% |
By thoroughly analyzing NVIDIA, we can discern the following trends:
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With a Price to Earnings ratio of 58.0, which is 0.69x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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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 52.3 which exceeds the industry average by 6.55x.
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The Price to Sales ratio of 29.95, which is 2.61x 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 Return on Equity (ROE) of 23.01% is 19.3% above the industry average, highlighting efficient use of equity to generate profits.
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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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With a revenue growth of 69.18%, which surpasses the industry average of 20.18%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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 light of the Debt-to-Equity ratio, a comparison between NVIDIA and its top 4 peers reveals the following information:
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NVIDIA has a stronger financial position compared to its top 4 peers, as evidenced 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 perceived as a positive indicator by investors.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. A high ROE reflects efficient use of shareholder funds, while low EBITDA and gross profit may indicate room for improvement. The high revenue growth rate signals a promising outlook for the company's future performance.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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