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In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within 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 | 46.17 | 38.19 | 24.50 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 90.88 | 22.84 | 28.61 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.07 | 9.14 | 12.58 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 117.04 | 5.99 | 11.39 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 29.77 | 4.68 | 6.80 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 33.16 | 8.39 | 4.14 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 585.17 | 1.57 | 2.89 | 3.98% | $7.85 | $5.22 | 2.78% |
| ARM Holdings PLC | 175.63 | 19.62 | 33.10 | 3.3% | $0.22 | $1.11 | 34.48% |
| Texas Instruments Inc | 28.61 | 8.58 | 8.33 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 59.08 | 3.35 | 11.13 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 23.49 | 4.76 | 4.02 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 22.69 | 11.88 | 16.01 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 28.33 | 3.02 | 1.54 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.33 | 3 | 5.36 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 197.06 | 31.41 | 43.98 | 8.67% | $0.07 | $0.15 | 273.57% |
| STMicroelectronics NV | 38.53 | 1.11 | 1.76 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 63.18 | 2.35 | 3.12 | 3.22% | $0.38 | $0.55 | 5.6% |
| United Microelectronics Corp | 13.35 | 1.57 | 2.36 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 56.88 | 3.88 | 7.37 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 42.95 | 7.54 | 14.46 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 20.32 | 1.62 | 2.38 | 2.48% | $0.25 | $0.45 | 7.34% |
| Average | 83.73 | 7.81 | 11.07 | 3.68% | $39.41 | $33.89 | 31.66% |
By carefully studying NVIDIA, we can deduce the following trends:
A Price to Earnings ratio of 46.17 significantly below the industry average by 0.55x suggests undervaluation. This can make the stock appealing for those seeking growth.
The elevated Price to Book ratio of 38.19 relative to the industry average by 4.89x suggests company might be overvalued based on its book value.
With a relatively high Price to Sales ratio of 24.5, which is 2.21x the industry average, the stock might be considered overvalued based on sales performance.
With a Return on Equity (ROE) of 28.72% that is 25.04% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.81x below the industry average. This potentially indicates lower profitability or financial challenges.
Compared to its industry, the company has lower gross profit of $33.85 Billion, which indicates 1.0x below the industry average, potentially indicating lower revenue after accounting for production costs.
The company's revenue growth of 55.6% exceeds the industry average of 31.66%, indicating strong sales performance and market outperformance.
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.
When examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
When comparing the debt-to-equity ratio, NVIDIA is in a stronger financial position compared to its top 4 peers.
The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.11.
The low P/E ratio suggests NVIDIA is 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 favorably. On the other hand, the high ROE and revenue growth, along with low EBITDA and gross profit, may indicate potential for strong future performance relative to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: NVDA
