In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal 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 | 47.31 | 39.07 | 25.11 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 69.45 | 19.32 | 25.17 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 39.44 | 7.94 | 11.07 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 123.94 | 6.34 | 12.07 | 2.06% | $2.11 | $4.78 | 35.59% |
| Texas Instruments Inc | 39.55 | 12.01 | 11.13 | 7.07% | $2.24 | $2.72 | -6.73% |
| Qualcomm Inc | 30.26 | 7.63 | 3.78 | -12.88% | $3.51 | $6.24 | 10.03% |
| Analog Devices Inc | 68.18 | 4.49 | 14.01 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 27.79 | 4.76 | 8.80 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.95 | 5.67 | 4.78 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 28.84 | 15.09 | 20.34 | 5.12% | $0.21 | $0.41 | 18.88% |
| ON Semiconductor Corp | 82.04 | 3.05 | 4.05 | 3.22% | $0.44 | $0.59 | -11.98% |
| First Solar Inc | 17.31 | 2.68 | 4.80 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 108 | 17.60 | 30.06 | 7.99% | $0.09 | $0.18 | 272.08% |
| Tower Semiconductor Ltd | 77.88 | 5.32 | 10.09 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 54.23 | 9.52 | 18.26 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 402.55 | 15.59 | 22.48 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 79.83 | 9.13 | 13.39 | 4.45% | $2.19 | $2.7 | 38.48% |
By thoroughly analyzing NVIDIA, we can discern the following trends:
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At 47.31, the stock's Price to Earnings ratio is 0.59x 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 39.07 which exceeds the industry average by 4.28x.
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The Price to Sales ratio of 25.11, which is 1.88x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 29.14% that is 24.69% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion is 17.69x above the industry average, highlighting stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $41.85 Billion, which indicates 15.5x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company is experiencing remarkable revenue growth, with a rate of 62.49%, outperforming the industry average of 38.48%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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 terms of the Debt-to-Equity ratio, NVIDIA can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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NVIDIA demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.09, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
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. A high ROE reflects efficient use of shareholder funds, while high EBITDA and gross profit signify robust operational performance. The high revenue growth indicates strong top-line expansion potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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