In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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. 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 | 54.58 | 51.38 | 30.35 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.57 | 7.79 | 11.72 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 130.92 | 11.53 | 16.05 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 121.39 | 3.91 | 9.23 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 37.37 | 10.62 | 11.75 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 17.73 | 6.70 | 4.60 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 222.01 | 23.48 | 40.36 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 139.93 | 2.42 | 4.36 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 66.48 | 3.08 | 11.53 | 1.36% | $1.12 | $1.42 | -10.06% |
| Microchip Technology Inc | 47.34 | 5.83 | 6.75 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 17.65 | 3.53 | 4.19 | 4.75% | $0.63 | $0.8 | -19.21% |
| Monolithic Power Systems Inc | 64 | 11.77 | 13.62 | 6.35% | $0.17 | $0.34 | 30.59% |
| STMicroelectronics NV | 10.49 | 1.30 | 1.69 | 1.98% | $0.74 | $1.23 | -26.63% |
| First Solar Inc | 17.16 | 2.81 | 5.56 | 4.22% | $0.45 | $0.45 | 10.81% |
| ASE Technology Holding Co Ltd | 19.32 | 2.21 | 1.16 | 3.16% | $28.59 | $26.43 | 3.85% |
| United Microelectronics Corp | 10.66 | 1.49 | 2.39 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.74 | 2.21 | 3.39 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 127.71 | 8.54 | 13.39 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 55.64 | 11.13 | 13.98 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 33.04 | 4.92 | 12.18 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 62.74 | 6.59 | 9.89 | 3.48% | $33.38 | $27.13 | 8.28% |
By closely studying NVIDIA, we can observe the following trends:
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At 54.58, the stock's Price to Earnings ratio is 0.87x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 51.38, which is 7.8x 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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With a relatively high Price to Sales ratio of 30.35, which is 3.07x the industry average, the stock might be considered overvalued based on sales performance.
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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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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion, which is 0.68x below the industry average, potentially indicating 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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The company's revenue growth of 93.61% is notably higher compared to the industry average of 8.28%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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 considering the Debt-to-Equity ratio, NVIDIA can be compared to its top 4 peers, leading to the following observations:
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NVIDIA has a stronger financial position compared to its top 4 peers, as evidenced 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 perceived as a positive indicator by investors.
Key Takeaways
The low P/E ratio suggests that NVIDIA may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the market values the company's assets and sales at a premium. On the other hand, the high ROE, low EBITDA, low gross profit, and high revenue growth point towards strong profitability and growth potential for NVIDIA relative to its industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
