Competitor Analysis: Evaluating NVIDIA And Competitors In Semiconductors & Semiconductor Equipment Industry
The article analyzes NVIDIA's performance in the Semiconductors & Semiconductor Equipment industry, comparing it with key competitors. NVIDIA shows a P/E ratio of 37.56, indicating potential undervaluation, while its P/B and P/S ratios suggest overvaluation. The company boasts a high ROE of 30.42% and impressive revenue growth of 77.94%, despite lower EBITDA and gross profit compared to industry averages. Additionally, NVIDIA's low debt-to-equity ratio of 0.13 reflects a strong financial position. Overall, the analysis highlights NVIDIA's growth potential amidst competitive pressures.
In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA NVDA against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key 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 Corp is an upfront developer of graphics processing unit and a full-stack computing infrastructure company with data-center-scale offerings that are reshaping industry. Traditionally, GPU were used to enhanvce experience,now Nvidia offers AI GPUs, and also a software platform, Cuda, used for AI model development and training. The company is also expanding its data center networking solutions, helping to tie GPUs together to handle complex workloads. such as AI, model training and inference, data analytics, scientific computing, and 3D graphics, with vertical-specific optimizations to address industries ranging from healthcare and telecom to automotive and manufacturing.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| NVIDIA Corp | 37.56 | 33.96 | 20.99 | 30.42% | $25.82 | $28.72 | 77.94% |
| Taiwan Semiconductor Manufacturing Co Ltd | 25.06 | 6.86 | 10.16 | 9.05% | $596.09 | $512.38 | 38.84% |
| Broadcom Inc | 79.67 | 11.59 | 15.21 | 8.01% | $8.54 | $10.14 | 24.71% |
| Qualcomm Inc | 16.62 | 6.34 | 4.27 | 11.97% | $4.23 | $6.51 | 17.45% |
| Advanced Micro Devices Inc | 102.96 | 2.91 | 6.54 | 0.84% | $1.69 | $3.88 | 24.16% |
| Texas Instruments Inc | 34.27 | 9.59 | 10.47 | 7.02% | $1.92 | $2.31 | -1.72% |
| ARM Holdings PLC | 142.29 | 17.76 | 31.06 | 4.05% | $0.22 | $0.95 | 19.3% |
| Micron Technology Inc | 21.20 | 2.04 | 3.19 | 3.32% | $3.95 | $2.96 | 38.27% |
| Analog Devices Inc | 63.77 | 2.82 | 10.66 | 1.11% | $1.03 | $1.43 | -3.56% |
| Monolithic Power Systems Inc | 16.14 | 8.99 | 13.07 | 52.73% | $0.17 | $0.34 | 36.93% |
| Microchip Technology Inc | 85.84 | 4.36 | 5.58 | -0.87% | $0.21 | $0.56 | -41.89% |
| ASE Technology Holding Co Ltd | 20.86 | 2.04 | 1.11 | 2.95% | $30.11 | $26.62 | 1.05% |
| STMicroelectronics NV | 13.20 | 1.12 | 1.55 | 1.95% | $0.89 | $1.25 | -22.42% |
| ON Semiconductor Corp | 11.23 | 1.95 | 2.49 | 4.37% | $0.62 | $0.78 | -14.65% |
| United Microelectronics Corp | 11.96 | 1.49 | 2.43 | 2.28% | $29.73 | $20.43 | -0.16% |
| First Solar Inc | 10.80 | 1.74 | 3.32 | 5.05% | $0.58 | $0.57 | 30.68% |
| Skyworks Solutions Inc | 19.94 | 1.55 | 2.59 | 2.54% | $0.31 | $0.44 | -11.07% |
| Credo Technology Group Holding Ltd | 1434.67 | 11.82 | 23.18 | 4.95% | $0.03 | $0.09 | 154.44% |
| Lattice Semiconductor Corp | 116.41 | 9.91 | 13.91 | 2.33% | $0.02 | $0.07 | -31.17% |
| Qorvo Inc | 259.43 | 2.01 | 1.84 | 1.22% | $0.14 | $0.39 | -14.67% |
| Universal Display Corp | 29.87 | 4.08 | 10.22 | 2.87% | $0.06 | $0.12 | 2.51% |
| Average | 125.81 | 5.55 | 8.64 | 6.39% | $34.03 | $29.61 | 12.35% |
Through a meticulous analysis of NVIDIA, we can observe the following trends:
A Price to Earnings ratio of 37.56 significantly below the industry average by 0.3x suggests undervaluation. This can make the stock appealing for those seeking growth.
With a Price to Book ratio of 33.96, which is 6.12x 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 20.99, which is 2.43x 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 30.42%, which is 24.03% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.82 Billion, which is 0.76x below the industry average, potentially indicating lower profitability or financial challenges.
With lower gross profit of $28.72 Billion, which indicates 0.97x below the industry average, the company may experience lower revenue after accounting for production costs.
The company's revenue growth of 77.94% is notably higher compared to the industry average of 12.35%, showcasing exceptional sales performance and strong demand for its products or services.
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.
By evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
Compared to its top 4 peers, NVIDIA has a stronger financial position indicated by its lower debt-to-equity ratio of 0.13.
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.
Key Takeaways
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, highlight potential for strong performance and expansion in the future.
This article was generated by Benzinga's automated content engine and reviewed by an editor.