In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing NVIDIA (NASDAQ:NVDA) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 | 46.75 | 44.01 | 25.99 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 27.85 | 7.62 | 11.29 | 9.05% | $596.09 | $512.38 | 38.84% |
| Broadcom Inc | 156.69 | 14 | 18.73 | 6.49% | $7.29 | $9.0 | 51.2% |
| Qualcomm Inc | 19.15 | 7.20 | 4.96 | 11.46% | $3.21 | $5.78 | 18.69% |
| Advanced Micro Devices Inc | 101.78 | 3.28 | 7.74 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 35.97 | 10.09 | 10.99 | 7.05% | $2.09 | $2.47 | -3.47% |
| ARM Holdings PLC | 241.30 | 25.52 | 43.87 | 1.83% | $0.11 | $0.81 | 4.71% |
| Analog Devices Inc | 65.68 | 3.04 | 11.40 | 1.36% | $1.12 | $1.42 | -10.06% |
| Micron Technology Inc | 26.11 | 2.17 | 3.52 | 4.07% | $4.3 | $3.35 | 84.28% |
| Microchip Technology Inc | 39.74 | 4.90 | 5.66 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 67.73 | 12.46 | 14.41 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 13.38 | 2.68 | 3.18 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.36 | 1.29 | 1.66 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.53 | 2.24 | 1.18 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 14.15 | 2.32 | 4.59 | 4.22% | $0.45 | $0.45 | 10.81% |
| Skyworks Solutions Inc | 24.28 | 2.27 | 3.46 | 0.95% | $0.18 | $0.43 | -15.9% |
| United Microelectronics Corp | 9.09 | 1.27 | 2.04 | 4.0% | $29.73 | $20.43 | 5.99% |
| MACOM Technology Solutions Holdings Inc | 117.61 | 8.07 | 12.33 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 54.25 | 10.85 | 13.63 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 30.17 | 4.49 | 11.12 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 56.57 | 6.62 | 9.78 | 4.07% | $35.62 | $31.04 | 8.27% |
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Through a thorough examination of NVIDIA, we can discern the following trends:
With a Price to Earnings ratio of 46.75, which is 0.83x 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 44.01 which exceeds the industry average by 6.65x.
The stock's relatively high Price to Sales ratio of 25.99, surpassing the industry average by 2.66x, may indicate an aspect of overvaluation in terms of sales performance.
The company has a higher Return on Equity (ROE) of 31.13%, which is 27.06% 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 0.64x below the industry average, potentially indicating lower profitability or financial challenges.
The gross profit of $26.16 Billion is 0.84x below that of its industry, suggesting potential lower revenue after accounting for production costs.
The company's revenue growth of 93.61% exceeds the industry average of 8.27%, indicating strong sales performance and market outperformance.
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.
In light of the Debt-to-Equity ratio, a comparison between NVIDIA and its top 4 peers reveals the following information:
When considering the debt-to-equity ratio, NVIDIA exhibits a stronger financial position compared to its top 4 peers.
This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.16, which can be perceived as a positive aspect 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. The high ROE reflects efficient use of shareholder equity, while low EBITDA and gross profit may indicate operational challenges. The high revenue growth rate signals strong sales performance relative to industry peers in the Semiconductors & Semiconductor Equipment sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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