In the fast-paced 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) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 46.84 | 44.09 | 26.04 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.78 | 8.15 | 12.07 | 9.05% | $596.09 | $512.38 | 38.84% |
| Broadcom Inc | 172.43 | 15.41 | 20.61 | 6.49% | $7.29 | $9.0 | 51.2% |
| Advanced Micro Devices Inc | 105.75 | 3.40 | 8.04 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 19.36 | 7.28 | 5.02 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 268.15 | 28.36 | 48.75 | 1.83% | $0.11 | $0.81 | 4.71% |
| Texas Instruments Inc | 34.72 | 9.74 | 10.61 | 7.05% | $2.09 | $2.47 | -3.47% |
| Analog Devices Inc | 62.81 | 2.91 | 10.90 | 1.36% | $1.12 | $1.42 | -10.06% |
| Micron Technology Inc | 25.98 | 2.16 | 3.50 | 4.07% | $4.3 | $3.35 | 84.28% |
| Monolithic Power Systems Inc | 73.99 | 13.61 | 15.75 | 6.35% | $0.17 | $0.34 | 30.59% |
| Microchip Technology Inc | 36.53 | 4.50 | 5.21 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 12.55 | 2.51 | 2.98 | 4.75% | $0.63 | $0.8 | -19.21% |
| ASE Technology Holding Co Ltd | 19.99 | 2.29 | 1.20 | 3.16% | $28.59 | $26.43 | 3.85% |
| STMicroelectronics NV | 13.48 | 1.15 | 1.58 | 1.95% | $0.74 | $1.23 | 2.15% |
| First Solar Inc | 14.32 | 2.34 | 4.64 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 9.67 | 1.36 | 2.17 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.41 | 2.19 | 3.34 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 127.50 | 8.75 | 13.37 | 2.67% | $0.05 | $0.11 | 33.47% |
| Qorvo Inc | 292.46 | 2.26 | 2.07 | 1.22% | $0.14 | $0.39 | -14.67% |
| Lattice Semiconductor Corp | 53.68 | 10.74 | 13.48 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 29.25 | 4.36 | 10.78 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 71.29 | 6.67 | 9.8 | 3.93% | $33.84 | $29.51 | 8.56% |
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Through an analysis of NVIDIA, we can infer the following trends:
A Price to Earnings ratio of 46.84 significantly below the industry average by 0.66x suggests undervaluation. This can make the stock appealing for those seeking growth.
The elevated Price to Book ratio of 44.09 relative to the industry average by 6.61x suggests company might be overvalued based on its book value.
The stock's relatively high Price to Sales ratio of 26.04, surpassing the industry average by 2.66x, may indicate an aspect of overvaluation in terms of sales performance.
The Return on Equity (ROE) of 31.13% is 27.2% above the industry average, highlighting efficient use of equity to generate profits.
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.
With lower gross profit of $26.16 Billion, which indicates 0.89x below the industry average, the company may experience lower revenue after accounting for production costs.
The company is experiencing remarkable revenue growth, with a rate of 93.61%, outperforming the industry average of 8.56%.
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.
When evaluating NVIDIA alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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
The low P/E ratio suggests NVIDIA is 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 more highly. On the other hand, the high ROE, revenue growth, and low EBITDA and gross profit ratios suggest that NVIDIA is performing well in terms of profitability and growth compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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