In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market standing, and growth prospects, our objective 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 to run large language models. 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 | 46.45 | 38.36 | 24.65 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 67.10 | 18.67 | 24.31 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 37.99 | 7.65 | 10.66 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 135.96 | 6.95 | 13.24 | 2.06% | $2.11 | $4.78 | 35.59% |
| Texas Instruments Inc | 35.21 | 10.56 | 10.25 | 8.21% | $2.24 | $2.72 | 14.24% |
| Qualcomm Inc | 31.10 | 7.85 | 3.89 | -12.88% | $3.51 | $6.24 | 10.03% |
| Analog Devices Inc | 67.02 | 4.42 | 13.77 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 28.25 | 4.84 | 8.94 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.74 | 5.82 | 4.92 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 27.29 | 14.28 | 19.25 | 5.12% | $0.21 | $0.41 | 18.88% |
| First Solar Inc | 18.58 | 2.88 | 5.15 | 5.19% | $0.61 | $0.61 | 79.67% |
| ON Semiconductor Corp | 84.90 | 3.15 | 4.19 | 3.22% | $0.44 | $0.59 | -11.98% |
| Credo Technology Group Holding Ltd | 114.79 | 18.70 | 31.95 | 7.99% | $0.09 | $0.18 | 272.08% |
| Tower Semiconductor Ltd | 74.35 | 5.08 | 9.63 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 54.91 | 9.63 | 18.49 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 421.65 | 16.33 | 23.54 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 81.86 | 9.12 | 13.48 | 4.53% | $2.19 | $2.7 | 39.87% |
Through a meticulous analysis of NVIDIA, we can observe the following trends:
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A Price to Earnings ratio of 46.45 significantly below the industry average by 0.57x suggests undervaluation. This can make the stock appealing for those seeking growth.
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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 38.36 which exceeds the industry average by 4.21x.
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The Price to Sales ratio of 24.65, which is 1.83x 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 29.14% is 24.61% 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 $38.75 Billion, which is 17.69x above the industry average, indicating stronger profitability and robust cash flow generation.
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The gross profit of $41.85 Billion is 15.5x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 62.49% is notably higher compared to the industry average of 39.87%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 0.09.
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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, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers. However, the high ROE, EBITDA, gross profit, and revenue growth suggest that NVIDIA is performing exceptionally well in terms of profitability and operational efficiency within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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