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In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.
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 | 53.65 | 45.79 | 28.10 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 91.46 | 22.99 | 28.79 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.28 | 10.50 | 14.14 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 129.59 | 5.89 | 11.93 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 25.40 | 3.99 | 5.80 | 6.1% | $5.9 | $5.05 | 46.0% |
| ARM Holdings PLC | 260.52 | 25.99 | 44.40 | 1.88% | $0.17 | $1.02 | 12.14% |
| Qualcomm Inc | 15.62 | 6.42 | 4.18 | 9.71% | $3.52 | $5.76 | 10.35% |
| Texas Instruments Inc | 32.01 | 9.71 | 9.63 | 7.85% | $2.09 | $2.58 | 16.38% |
| Analog Devices Inc | 59.71 | 3.39 | 11.25 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 25.83 | 5.71 | 4.57 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 25.68 | 13.82 | 18.67 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 208.19 | 33.19 | 46.46 | 8.67% | $0.07 | $0.15 | 273.57% |
| STMicroelectronics NV | 61.28 | 1.37 | 2.27 | -0.05% | $0.62 | $0.65 | -14.42% |
| ASE Technology Holding Co Ltd | 23.88 | 2.66 | 1.27 | 2.49% | $26.99 | $25.69 | 7.5% |
| First Solar Inc | 19.33 | 2.84 | 5.60 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 47.72 | 2.58 | 3.32 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 14.01 | 1.74 | 2.44 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 29.23 | 1.93 | 2.89 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 45.98 | 8.50 | 16.31 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 310.39 | 14.22 | 20.15 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 76.8 | 9.34 | 13.37 | 4.14% | $40.09 | $32.86 | 27.71% |
Upon closer analysis of NVIDIA, the following trends become apparent:
The stock's Price to Earnings ratio of 53.65 is lower than the industry average by 0.7x, suggesting potential value in the eyes of market participants.
With a Price to Book ratio of 45.79, which is 4.9x 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.
The Price to Sales ratio of 28.1, which is 2.1x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The company has a higher Return on Equity (ROE) of 28.72%, which is 24.58% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.8x below the industry average. This potentially indicates lower profitability or financial challenges.
The gross profit of $33.85 Billion is 1.03x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
The company's revenue growth of 55.6% exceeds the industry average of 27.71%, indicating strong sales performance and market outperformance.
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
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, NVIDIA can be compared to its top 4 peers, leading to the following observations:
Compared to its top 4 peers, NVIDIA has a stronger financial position indicated by its lower debt-to-equity ratio of 0.11.
This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
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. The high ROE reflects efficient use of shareholder equity, while the low EBITDA may indicate room for operational improvement. The high gross profit margin and revenue growth rate demonstrate strong financial performance and growth potential within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: NVDA
