Competitor Analysis: Evaluating NVIDIA And Competitors In Semiconductors & Semiconductor Equipment Industry
Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 34.94 | 31.59 | 19.52 | 30.42% | $25.82 | $28.72 | 77.94% |
| Broadcom Inc | 81.90 | 11.92 | 15.64 | 8.01% | $8.54 | $10.14 | 24.71% |
| Qualcomm Inc | 15.15 | 5.78 | 3.90 | 11.97% | $4.23 | $6.51 | 17.45% |
| Advanced Micro Devices Inc | 90.39 | 2.55 | 5.74 | 0.84% | $1.69 | $3.88 | 24.16% |
| Texas Instruments Inc | 29.26 | 8.19 | 8.94 | 7.02% | $1.92 | $2.31 | -1.72% |
| ARM Holdings PLC | 138.37 | 17.27 | 30.20 | 4.05% | $0.22 | $0.95 | 19.3% |
| Analog Devices Inc | 58.50 | 2.59 | 9.78 | 1.11% | $1.03 | $1.43 | -3.56% |
| Micron Technology Inc | 17.45 | 1.68 | 2.63 | 3.32% | $3.95 | $2.96 | 38.27% |
| Monolithic Power Systems Inc | 14.67 | 8.17 | 11.88 | 52.73% | $0.17 | $0.34 | 36.93% |
| Microchip Technology Inc | 73.56 | 3.74 | 4.78 | -0.87% | $0.21 | $0.56 | -41.89% |
| STMicroelectronics NV | 13.12 | 1.11 | 1.54 | 1.95% | $0.89 | $1.25 | -22.42% |
| ASE Technology Holding Co Ltd | 19.21 | 1.88 | 1.02 | 2.95% | $30.11 | $26.62 | 1.05% |
| United Microelectronics Corp | 12.91 | 1.47 | 2.44 | 2.28% | $29.73 | $20.43 | -0.16% |
| ON Semiconductor Corp | 10.09 | 1.76 | 2.24 | 4.37% | $0.62 | $0.78 | -14.65% |
| First Solar Inc | 10.91 | 1.76 | 3.35 | 5.05% | $0.58 | $0.57 | 30.68% |
| Skyworks Solutions Inc | 18.05 | 1.41 | 2.34 | 2.54% | $0.31 | $0.44 | -11.07% |
| Credo Technology Group Holding Ltd | 1347.33 | 11.10 | 21.77 | 4.95% | $0.03 | $0.09 | 154.44% |
| Lattice Semiconductor Corp | 99.77 | 8.50 | 11.92 | 2.33% | $0.02 | $0.07 | -31.17% |
| Universal Display Corp | 25.48 | 3.48 | 8.72 | 2.87% | $0.06 | $0.12 | 2.51% |
| Qorvo Inc | 213.96 | 1.66 | 1.52 | 1.22% | $0.14 | $0.39 | -14.67% |
| Average | 120.53 | 5.05 | 7.91 | 6.25% | $4.44 | $4.2 | 10.96% |
By closely studying NVIDIA, we can observe the following trends:
With a Price to Earnings ratio of 34.94, which is 0.29x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
The elevated Price to Book ratio of 31.59 relative to the industry average by 6.26x suggests company might be overvalued based on its book value.
The Price to Sales ratio of 19.52, which is 2.47x 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 24.17% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.82 Billion, which is 5.82x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
The gross profit of $28.72 Billion is 6.84x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
With a revenue growth of 77.94%, which surpasses the industry average of 10.96%, the company is demonstrating robust sales expansion and gaining market share.
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.
In light of the Debt-to-Equity ratio, a comparison between NVIDIA and its top 4 peers reveals the following information:
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
For NVIDIA, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and premium valuation. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry peers, reflecting robust financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.