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 | 56.23 | 52.93 | 31.27 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.42 | 8.54 | 12.85 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 145.02 | 12.77 | 17.78 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 122.65 | 3.95 | 9.33 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 17.84 | 6.74 | 4.63 | 11.46% | $3.21 | $5.78 | 18.69% |
| Texas Instruments Inc | 35.89 | 10.20 | 11.29 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 232.92 | 24.63 | 42.35 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 144.53 | 2.50 | 4.50 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 66.52 | 3.08 | 11.54 | 1.36% | $1.12 | $1.42 | -10.06% |
| Microchip Technology Inc | 41.17 | 5.07 | 5.87 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 66.48 | 12.23 | 14.15 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.51 | 3.30 | 3.92 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.88 | 1.35 | 1.75 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 20.20 | 2.31 | 1.22 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.73 | 2.74 | 5.42 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.58 | 1.48 | 2.37 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.81 | 2.22 | 3.40 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 133.72 | 8.94 | 14.02 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 56.54 | 11.31 | 14.20 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 31.75 | 4.73 | 11.70 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 64.53 | 6.74 | 10.12 | 3.48% | $33.38 | $27.13 | 8.28% |
Through a detailed examination of NVIDIA, we can deduce the following trends:
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A Price to Earnings ratio of 56.23 significantly below the industry average by 0.87x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 52.93 relative to the industry average by 7.85x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 31.27, which is 3.09x 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 31.13%, which is 27.65% 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 $22.86 Billion, which is 0.68x below the industry average, the company may face lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $26.16 Billion, which indicates 0.96x below the industry average, potentially indicating lower revenue after accounting for production costs.
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With a revenue growth of 93.61%, which surpasses the industry average of 8.28%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
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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When comparing the debt-to-equity ratio, NVIDIA is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.16.
Key Takeaways
The PE, PB, and PS ratios for NVIDIA are indicating that the stock is relatively undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. On the other hand, the high ROE, low EBITDA, low gross profit, and high revenue growth suggest that NVIDIA is performing well and has strong growth potential within the industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
