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 | 57.30 | 53.94 | 31.86 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.24 | 8.49 | 12.78 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 137.77 | 12.13 | 16.89 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 127.42 | 4.10 | 9.69 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 18.27 | 6.91 | 4.74 | 11.46% | $3.21 | $5.78 | 18.69% |
| Texas Instruments Inc | 36.55 | 10.39 | 11.49 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 233.60 | 24.70 | 42.47 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 147.43 | 2.55 | 4.59 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 66.55 | 3.08 | 11.55 | 1.36% | $1.12 | $1.42 | -10.06% |
| Microchip Technology Inc | 42.81 | 5.27 | 6.10 | 1.24% | $0.34 | $0.67 | -48.37% |
| Monolithic Power Systems Inc | 65.57 | 12.06 | 13.95 | 6.35% | $0.17 | $0.34 | 30.59% |
| ON Semiconductor Corp | 16.37 | 3.27 | 3.89 | 4.75% | $0.63 | $0.8 | -19.21% |
| STMicroelectronics NV | 10.64 | 1.32 | 1.71 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.92 | 2.28 | 1.20 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 17.36 | 2.84 | 5.63 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.66 | 1.49 | 2.39 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.78 | 2.21 | 3.39 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 136.98 | 9.16 | 14.37 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 58.20 | 11.64 | 14.62 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 32.15 | 4.79 | 11.85 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 64.96 | 6.77 | 10.17 | 3.48% | $33.38 | $27.13 | 8.28% |
When closely examining NVIDIA, the following trends emerge:
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The Price to Earnings ratio of 57.3 is 0.88x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 53.94 relative to the industry average by 7.97x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 31.86, which is 3.13x 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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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion, which is 0.68x below the industry average, the company may face 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% exceeds the industry average of 8.28%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated 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 seen as a positive aspect for 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. In terms of ROE, NVIDIA outperforms with a high ratio, reflecting efficient use of shareholder equity. However, the low EBITDA and gross profit levels may indicate operational challenges. The high revenue growth rate signals a promising future outlook for NVIDIA within the Semiconductors & Semiconductor Equipment industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
