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 to run large language models. 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 | 56.61 | 48.31 | 29.65 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 90.24 | 22.68 | 28.41 | 5.8% | $8.29 | $10.7 | 22.03% |
| Advanced Micro Devices Inc | 149.73 | 6.80 | 13.79 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 28.73 | 4.52 | 6.56 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 16.68 | 6.85 | 4.46 | 9.71% | $3.52 | $5.76 | 10.35% |
| Intel Corp | 1234.33 | 1.66 | 3.04 | 3.98% | $0.47 | $3.54 | 6.17% |
| ARM Holdings PLC | 243.53 | 24.30 | 41.51 | 1.88% | $0.17 | $1.02 | 12.14% |
| Texas Instruments Inc | 29.03 | 8.71 | 8.45 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 58.37 | 3.31 | 11 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 25.27 | 5.12 | 4.32 | 6.43% | $1.11 | $1.79 | -2.37% |
| ASE Technology Holding Co Ltd | 30.55 | 3.26 | 1.66 | 3.56% | $32.4 | $28.88 | 5.29% |
| Credo Technology Group Holding Ltd | 228.10 | 36.36 | 50.90 | 8.67% | $0.07 | $0.15 | 273.57% |
| First Solar Inc | 20.16 | 3.13 | 5.59 | 5.19% | $0.61 | $0.61 | 79.67% |
| STMicroelectronics NV | 40.38 | 1.17 | 1.85 | 1.33% | $0.64 | $1.06 | -1.97% |
| ON Semiconductor Corp | 66.14 | 2.50 | 3.26 | 3.22% | $0.38 | $0.55 | 5.6% |
| United Microelectronics Corp | 13.85 | 1.63 | 2.45 | 4.29% | $30.07 | $17.62 | -2.25% |
| Rambus Inc | 47.77 | 8.38 | 16.08 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 28.68 | 1.89 | 2.84 | 1.81% | $0.23 | $0.4 | 6.57% |
| Average | 138.33 | 8.37 | 12.13 | 4.53% | $5.19 | $4.99 | 32.59% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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A Price to Earnings ratio of 56.61 significantly below the industry average by 0.41x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 48.31, which is 5.77x 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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The stock's relatively high Price to Sales ratio of 29.65, surpassing the industry average by 2.44x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 28.72% is 24.19% above the industry average, highlighting efficient use of equity to generate profits.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 6.15x above the industry average, indicating stronger profitability and robust cash flow generation.
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With higher gross profit of $33.85 Billion, which indicates 6.78x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 55.6% exceeds the industry average of 32.59%, indicating strong sales performance and market outperformance.
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.
When comparing NVIDIA with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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NVIDIA demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.11, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively 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 more highly. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth suggest that NVIDIA is performing well financially and experiencing strong growth compared to its industry counterparts.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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