In today’s rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 | 32.96 | 29.81 | 18.42 | 30.42% | $25.82 | $28.72 | 77.94% |
| Broadcom Inc | 76.95 | 11.20 | 14.69 | 8.01% | $8.54 | $10.14 | 24.71% |
| Qualcomm Inc | 14.69 | 5.60 | 3.78 | 11.97% | $4.23 | $6.51 | 17.45% |
| Advanced Micro Devices Inc | 85.56 | 2.41 | 5.43 | 0.84% | $1.69 | $3.88 | 24.16% |
| Texas Instruments Inc | 28 | 7.84 | 8.56 | 7.02% | $1.92 | $2.31 | -1.72% |
| ARM Holdings PLC | 127.41 | 15.90 | 27.81 | 4.05% | $0.22 | $0.95 | 19.3% |
| Analog Devices Inc | 55.91 | 2.47 | 9.35 | 1.11% | $1.03 | $1.43 | -3.56% |
| Micron Technology Inc | 15.97 | 1.53 | 2.40 | 3.32% | $3.95 | $2.96 | 38.27% |
| Monolithic Power Systems Inc | 13.89 | 7.73 | 11.24 | 52.73% | $0.17 | $0.34 | 36.93% |
| Microchip Technology Inc | 69.18 | 3.52 | 4.50 | -0.87% | $0.21 | $0.56 | -41.89% |
| STMicroelectronics NV | 12.05 | 1.02 | 1.42 | 1.95% | $0.89 | $1.25 | -22.42% |
| ASE Technology Holding Co Ltd | 18.03 | 1.76 | 0.96 | 2.95% | $30.11 | $26.62 | 1.05% |
| United Microelectronics Corp | 11.65 | 1.45 | 2.37 | 2.28% | $29.73 | $20.43 | -0.16% |
| ON Semiconductor Corp | 9.57 | 1.67 | 2.12 | 4.37% | $0.62 | $0.78 | -14.65% |
| First Solar Inc | 10.19 | 1.65 | 3.13 | 5.05% | $0.58 | $0.57 | 30.68% |
| Skyworks Solutions Inc | 17.47 | 1.36 | 2.27 | 2.54% | $0.31 | $0.44 | -11.07% |
| Credo Technology Group Holding Ltd | 1162 | 9.57 | 18.78 | 4.95% | $0.03 | $0.09 | 154.44% |
| Lattice Semiconductor Corp | 94.91 | 8.08 | 11.34 | 2.33% | $0.02 | $0.07 | -31.17% |
| Qorvo Inc | 207.86 | 1.61 | 1.47 | 1.22% | $0.14 | $0.39 | -14.67% |
| Universal Display Corp | 24.47 | 3.34 | 8.37 | 2.87% | $0.06 | $0.12 | 2.51% |
| Average | 108.2 | 4.72 | 7.37 | 6.25% | $4.44 | $4.2 | 10.96% |
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By closely examining NVIDIA, we can identify the following trends:
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The Price to Earnings ratio of 32.96 is 0.3x lower than the industry average, indicating potential undervaluation for the stock.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 29.81 which exceeds the industry average by 6.32x.
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The Price to Sales ratio of 18.42, which is 2.5x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 30.42% is 24.17% above the industry average, highlighting efficient use of equity to generate profits.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.82 Billion, which is 5.82x above the industry average, indicating stronger profitability and robust cash flow generation.
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With higher gross profit of $28.72 Billion, which indicates 6.84x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company is experiencing remarkable revenue growth, with a rate of 77.94%, outperforming the industry average of 10.96%.
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 examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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NVIDIA is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.13.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
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, NVIDIA’s high ROE, EBITDA, gross profit, and revenue growth reflect strong financial performance relative to industry competitors.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.