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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 Lam Research (NASDAQ:LRCX) 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.
Lam Research is one of the largest semiconductor wafer fabrication equipment, or WFE, manufacturers in the world. It specializes in the market segments of deposition and etch, which entail the buildup of layers on a semiconductor and the subsequent selective removal of patterns from each layer. Lam holds the top market share in etch and holds the clear cut second share in deposition. It is more exposed to memory chipmakers for DRAM and NAND chips. It counts as top customers the largest chipmakers in the world, including TSMC, Samsung, Intel, and Micron.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Lam Research Corp | 26.45 | 11.67 | 6.79 | 12.32% | $1.29 | $1.84 | 20.71% |
| ASML Holding NV | 42.35 | 19.39 | 11.23 | 11.07% | $2.06 | $3.21 | -9.55% |
| Applied Materials Inc | 20.89 | 8.14 | 5.79 | 9.21% | $2.12 | $3.21 | 5.49% |
| KLA Corp | 36.93 | 29.89 | 10.39 | 25.88% | $1.13 | $1.56 | 9.07% |
| Teradyne Inc | 43.25 | 7.86 | 7.93 | 7.04% | $0.25 | $0.43 | 6.64% |
| Entegris Inc | 91.46 | 4.77 | 5.11 | 1.95% | $0.22 | $0.38 | -9.81% |
| Enphase Energy Inc | 118.92 | 16.93 | 10.77 | 1.2% | $0.03 | $0.14 | -57.33% |
| Onto Innovation Inc | 58.02 | 5.24 | 10.74 | 2.93% | $0.07 | $0.13 | 27.1% |
| MKS Instruments Inc | 747.60 | 3.38 | 2.10 | 0.99% | $0.19 | $0.42 | -11.57% |
| Amkor Technology Inc | 19.82 | 1.83 | 1.16 | 1.66% | $0.25 | $0.21 | 0.24% |
| FormFactor Inc | 28.51 | 3.58 | 4.90 | 2.07% | $0.02 | $0.09 | 26.65% |
| Axcelis Technologies Inc | 13.98 | 3.54 | 3.01 | 5.54% | $0.06 | $0.11 | -6.37% |
| Veeco Instruments Inc | 19.84 | 2.41 | 2.54 | 2.2% | $0.03 | $0.08 | 8.81% |
| Photronics Inc | 10.11 | 1.36 | 1.64 | 3.27% | $0.08 | $0.08 | -5.9% |
| ACM Research Inc | 13.31 | 1.25 | 1.57 | 2.97% | $0.04 | $0.1 | 40.05% |
| Aehr Test Systems | 11.59 | 3.44 | 5.81 | 24.09% | $0.0 | $0.01 | -25.46% |
| inTest Corp | 18.81 | 0.88 | 0.69 | 0.23% | $0.0 | $0.01 | 4.4% |
| Average | 80.96 | 7.12 | 5.34 | 6.39% | $0.41 | $0.64 | 0.15% |
After a detailed analysis of Lam Research, the following trends become apparent:
At 26.45, the stock's Price to Earnings ratio is 0.33x less than the industry average, suggesting favorable growth potential.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 11.67 which exceeds the industry average by 1.64x.
The stock's relatively high Price to Sales ratio of 6.79, surpassing the industry average by 1.27x, may indicate an aspect of overvaluation in terms of sales performance.
The Return on Equity (ROE) of 12.32% is 5.93% above the industry average, highlighting efficient use of equity to generate profits.
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.29 Billion, which is 3.15x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
Compared to its industry, the company has higher gross profit of $1.84 Billion, which indicates 2.88x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company is experiencing remarkable revenue growth, with a rate of 20.71%, outperforming the industry average of 0.15%.
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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.
By considering the Debt-to-Equity ratio, Lam Research can be compared to its top 4 peers, leading to the following observations:
Lam Research demonstrates a stronger financial position compared to its top 4 peers in the sector.
With a lower debt-to-equity ratio of 0.58, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
For Lam Research, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, gross profit, and revenue growth, Lam Research outperforms its competitors, reflecting strong financial performance and growth prospects in the Semiconductors & Semiconductor Equipment industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: LRCX
