In the dynamic and cutthroat world of business, conducting thorough company analysis is essential 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 | 55.37 | 52.12 | 30.79 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.02 | 8.43 | 12.69 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 135.82 | 11.96 | 16.65 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 125.65 | 4.04 | 9.55 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 18.19 | 6.87 | 4.72 | 11.46% | $3.21 | $5.78 | 18.69% |
| Texas Instruments Inc | 36.66 | 10.42 | 11.53 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 232.08 | 24.54 | 42.19 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 142.63 | 2.46 | 4.45 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 67.54 | 3.13 | 11.72 | 1.36% | $1.12 | $1.42 | -10.06% |
| Microchip Technology Inc | 45.41 | 5.60 | 6.47 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 17.32 | 3.46 | 4.12 | 4.75% | $0.63 | $0.8 | -19.21% |
| Monolithic Power Systems Inc | 65.71 | 12.09 | 13.98 | 6.35% | $0.17 | $0.34 | 30.59% |
| STMicroelectronics NV | 10.61 | 1.32 | 1.70 | 1.98% | $0.74 | $1.23 | -26.63% |
| First Solar Inc | 17.87 | 2.93 | 5.79 | 4.22% | $0.45 | $0.45 | 10.81% |
| ASE Technology Holding Co Ltd | 19.81 | 2.27 | 1.19 | 3.16% | $28.59 | $26.43 | 3.85% |
| United Microelectronics Corp | 10.70 | 1.50 | 2.40 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.75 | 2.21 | 3.39 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 135.61 | 9.07 | 14.22 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 57.14 | 11.43 | 14.35 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 33 | 4.92 | 12.17 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 64.61 | 6.77 | 10.17 | 3.48% | $33.38 | $27.13 | 8.28% |
Through a thorough examination of NVIDIA, we can discern the following trends:
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With a Price to Earnings ratio of 55.37, which is 0.86x 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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With a Price to Book ratio of 52.12, which is 7.7x 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.
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The stock's relatively high Price to Sales ratio of 30.79, surpassing the industry average by 3.03x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 31.13% that is 27.65% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion, which is 0.68x below the industry average. This potentially indicates lower profitability or financial challenges.
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The company has lower gross profit of $26.16 Billion, which indicates 0.96x below the industry average. This potentially indicates lower revenue after accounting for production costs.
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The company is experiencing remarkable revenue growth, with a rate of 93.61%, outperforming the industry average of 8.28%.
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.
When comparing NVIDIA with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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NVIDIA exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.16.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for 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 equity. The low EBITDA and gross profit may indicate room for improvement in operational efficiency. The high revenue growth rate signals strong performance in capturing market share.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
