In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim 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 | 54.73 | 51.52 | 30.43 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 31.16 | 8.21 | 12.35 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 134.50 | 11.85 | 16.49 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 125.72 | 4.05 | 9.56 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 37.51 | 10.66 | 11.79 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 18.24 | 6.89 | 4.73 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 232.01 | 24.53 | 42.18 | 1.83% | $0.11 | $0.81 | 4.71% |
| Analog Devices Inc | 68.02 | 3.15 | 11.80 | 1.36% | $1.12 | $1.42 | -10.06% |
| Micron Technology Inc | 140.79 | 2.43 | 4.39 | 1.99% | $3.63 | $2.74 | 93.27% |
| Microchip Technology Inc | 48.83 | 6.02 | 6.96 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 18.35 | 3.67 | 4.36 | 4.75% | $0.63 | $0.8 | -19.21% |
| Monolithic Power Systems Inc | 65.43 | 12.04 | 13.92 | 6.35% | $0.17 | $0.34 | 30.59% |
| STMicroelectronics NV | 10.75 | 1.34 | 1.73 | 1.98% | $0.74 | $1.23 | -26.63% |
| First Solar Inc | 17.91 | 2.93 | 5.81 | 4.22% | $0.45 | $0.45 | 10.81% |
| ASE Technology Holding Co Ltd | 19.92 | 2.28 | 1.20 | 3.16% | $28.59 | $26.43 | 3.85% |
| United Microelectronics Corp | 10.79 | 1.51 | 2.42 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.98 | 2.23 | 3.42 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 131.63 | 8.80 | 13.81 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 57.19 | 11.44 | 14.37 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 33.26 | 4.95 | 12.26 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 64.53 | 6.79 | 10.19 | 3.48% | $33.38 | $27.13 | 8.28% |
Through a meticulous analysis of NVIDIA, we can observe the following trends:
-
With a Price to Earnings ratio of 54.73, which is 0.85x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
-
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 51.52 which exceeds the industry average by 7.59x.
-
With a relatively high Price to Sales ratio of 30.43, which is 2.99x the industry average, the stock might be considered overvalued based on sales performance.
-
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.
-
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.
-
With lower gross profit of $26.16 Billion, which indicates 0.96x below the industry average, the company may experience lower revenue after accounting for production costs.
-
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 is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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:
-
In terms of the debt-to-equity ratio, NVIDIA has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
-
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.16.
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, revenue growth, and low EBITDA and gross profit ratios highlight NVIDIA's strong profitability and growth potential relative to its industry counterparts.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
