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 | 58.64 | 52.87 | 30.27 | 23.01% | $22.58 | $26.67 | 69.18% |
| Broadcom Inc | 108.76 | 20.14 | 25.22 | 7.12% | $8.02 | $10.2 | 20.16% |
| Taiwan Semiconductor Manufacturing Co Ltd | 26.05 | 8.22 | 11.06 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 99.77 | 4.53 | 9.19 | 1.48% | $0.72 | $3.06 | 31.71% |
| Texas Instruments Inc | 37.66 | 11.42 | 11.33 | 7.85% | $2.09 | $2.58 | 16.38% |
| Qualcomm Inc | 15.36 | 6.31 | 4.11 | 9.71% | $3.52 | $5.76 | 10.35% |
| ARM Holdings PLC | 212.52 | 21.20 | 36.22 | 1.88% | $0.17 | $1.02 | 12.14% |
| Micron Technology Inc | 20.99 | 2.57 | 3.90 | 3.79% | $4.33 | $3.51 | 36.56% |
| Analog Devices Inc | 65.05 | 3.69 | 12.26 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 28.35 | 6.27 | 5.01 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 22.26 | 11.97 | 16.18 | 4.01% | $0.18 | $0.37 | 30.97% |
| STMicroelectronics NV | 57.70 | 1.29 | 2.14 | -0.05% | $0.62 | $0.65 | -14.42% |
| ASE Technology Holding Co Ltd | 20.29 | 2.26 | 1.08 | 2.49% | $26.99 | $25.69 | 7.5% |
| ON Semiconductor Corp | 48.56 | 2.63 | 3.38 | 2.13% | $0.38 | $0.55 | -15.36% |
| First Solar Inc | 16.81 | 2.47 | 4.87 | 4.09% | $0.49 | $0.5 | 8.58% |
| Credo Technology Group Holding Ltd | 414.14 | 30.48 | 49.81 | 5.63% | $0.04 | $0.11 | 179.73% |
| United Microelectronics Corp | 12.27 | 1.53 | 2.13 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 30.15 | 1.99 | 2.98 | 1.81% | $0.23 | $0.4 | 6.57% |
| Lattice Semiconductor Corp | 285.78 | 13.10 | 18.55 | 0.42% | $0.02 | $0.08 | -0.08% |
| Qorvo Inc | 108.67 | 2.49 | 2.40 | 0.75% | $0.12 | $0.33 | -7.66% |
| Average | 85.85 | 8.13 | 11.67 | 3.71% | $40.0 | $32.76 | 20.18% |
When analyzing NVIDIA, the following trends become evident:
-
With a Price to Earnings ratio of 58.64, which is 0.68x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
-
With a Price to Book ratio of 52.87, which is 6.5x 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.
-
The Price to Sales ratio of 30.27, which is 2.59x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
-
The company has a higher Return on Equity (ROE) of 23.01%, which is 19.3% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
-
Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.58 Billion, which is 0.56x below the industry average, potentially indicating lower profitability or financial challenges.
-
The gross profit of $26.67 Billion is 0.81x below that of its industry, suggesting potential lower revenue after accounting for production costs.
-
The company's revenue growth of 69.18% exceeds the industry average of 20.18%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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:
-
NVIDIA is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.12.
-
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
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. The high ROE reflects efficient use of shareholder equity, while low EBITDA and gross profit may indicate operational challenges. The high revenue growth rate signals strong sales performance relative to industry peers in the Semiconductors & Semiconductor Equipment sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
- No comments yet. Be the first to comment!