In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer 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 | 58.58 | 52.82 | 30.24 | 23.01% | $22.58 | $26.67 | 69.18% |
| Broadcom Inc | 109.58 | 20.29 | 25.41 | 7.12% | $8.02 | $10.2 | 20.16% |
| Taiwan Semiconductor Manufacturing Co Ltd | 26.17 | 8.26 | 11.12 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 100.08 | 4.55 | 9.21 | 1.48% | $0.72 | $3.06 | 31.71% |
| Texas Instruments Inc | 37.56 | 11.39 | 11.30 | 7.85% | $2.09 | $2.58 | 16.38% |
| Qualcomm Inc | 15.42 | 6.34 | 4.12 | 9.71% | $3.52 | $5.76 | 10.35% |
| ARM Holdings PLC | 213.12 | 21.26 | 36.33 | 1.88% | $0.17 | $1.02 | 12.14% |
| Micron Technology Inc | 21.22 | 2.60 | 3.94 | 3.79% | $4.33 | $3.51 | 36.56% |
| Analog Devices Inc | 65.01 | 3.69 | 12.25 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 28.33 | 6.26 | 5.01 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 22.67 | 12.20 | 16.47 | 4.01% | $0.18 | $0.37 | 30.97% |
| STMicroelectronics NV | 57.79 | 1.29 | 2.14 | -0.05% | $0.62 | $0.65 | -14.42% |
| ASE Technology Holding Co Ltd | 20.30 | 2.26 | 1.08 | 2.49% | $26.99 | $25.69 | 7.5% |
| ON Semiconductor Corp | 48.81 | 2.64 | 3.40 | 2.13% | $0.38 | $0.55 | -15.36% |
| Credo Technology Group Holding Ltd | 423.21 | 31.15 | 50.90 | 5.63% | $0.04 | $0.11 | 179.73% |
| First Solar Inc | 16.34 | 2.40 | 4.73 | 4.09% | $0.49 | $0.5 | 8.58% |
| United Microelectronics Corp | 12.26 | 1.53 | 2.13 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 30.36 | 2 | 3 | 1.81% | $0.23 | $0.4 | 6.57% |
| Lattice Semiconductor Corp | 286.17 | 13.11 | 18.58 | 0.42% | $0.02 | $0.08 | -0.08% |
| Qorvo Inc | 108.13 | 2.48 | 2.39 | 0.75% | $0.12 | $0.33 | -7.66% |
| Average | 86.45 | 8.19 | 11.76 | 3.71% | $40.0 | $32.76 | 20.18% |
By conducting an in-depth analysis of NVIDIA, we can identify the following trends:
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At 58.58, 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 52.82 which exceeds the industry average by 6.45x.
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The Price to Sales ratio of 30.24, which is 2.57x 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 19.3% 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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The company has lower gross profit of $26.67 Billion, which indicates 0.81x below the industry average. This potentially indicates lower revenue after accounting for production costs.
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The company's revenue growth of 69.18% is notably higher compared to the industry average of 20.18%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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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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.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
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 operational challenges. The high revenue growth signifies strong top-line performance relative to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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