It’s time to breakdown one of the most popular names within the markets. Here is the breakdown on $NVDA, otherwise known as Nvidia.
Current Price: $557.8239
52/Wk High: $589.07
52/Wk Low: $180.68
Market Cap: $345.3 Billion
Read below for the breakdown!
Nvidia is a leading semiconductor and semiconductor equipment company that focuses mainly on GPU’s, Artificial Intelligence, and processors.
Breaking down Nvidia’s stock price according to TREFIS data, 87.95% of the stock price is based on the company’s GPU segment.
Furthermore, 11.14% of Nvidia’s stock price is based on their Tegra Processors segment and 0.91% is based on the company’s cash and or net of debt.
In recent news, Nvidia announced the acquisition of Arm for $40 billion, which if approved would turn Nvidia into an even bigger semiconductor monster that would likely dominate the space for years to come.
Not only that, but just days ago Nio announced a partnership with Nvidia to create a new generation of automated driving EV’s, which only expands Nvidia's exposure to other markets.
Shifting into the numbers, Nvidia beat expectations for the most recent quarter, Q3 2021, with an EPS of $2.91, much better than the expected EPS consensus of $2.57. On a year over year basis, EPS improved 63.48%.
Nvidia went on to report Q3 revenues of $4.73 billion, representing a 57% increase in revenues year over year. The company also saw record gaming revenues of $2.27 billion, representing a 37% increase.
As for Nvidia’s Data Center segment, the segment turned out $1.90 billion in revenues, representing a 162% increase in Data Center revenues.
Management went on to report a Q3 gross margin of 62.6%, down from the same time 2020 gross margin level of 63.6% but better than the Q2 2021 level of 58.8%.
Furthermore, Nvidia reported a significant increase in operating expenses, with operating expenses totaling $1.562 billion, much higher than the Q3 2020 level of $989 million.
Net income also improved significantly by 49%, totaling $1.336 billion, much better than the Q3 2020 level of $899 million.
When it comes to guidance, management expects revenues of $4.80 billion (Give or Take 2%) for Q4 2021. Not only that, but GAAP gross margin is expected to be 62.8% and operating expenses on a GAAP basis are expected to be $1.64 billion for Q4 2021.
Management was upbeat about the quarter.
“NVIDIA is firing on all cylinders, achieving record revenues in Gaming, Data Center and overall,” CEO Jensen Huang said.
Taking a look at the balance sheet the numbers are solid.
Total Debt: $6.961 Billion
Total Liabilities: $11.547 Billion
Total Assets: $26.881 Billion
Cash & Short Term Inv: $10.139 Billion
When it comes to the valuation Nvidia is expensive but not too far gone.
Price to Earnings: 86.78x
Price to Sales: 22.25x
Price to Book: 21.44x
Price to Cash Flow: 50.13x
Management has done a solid job, with leadership continuing to outperform.
Return on Equity: 28.82%
Return on Assets: 17.92%
Return on Invest Capital: 20.38%
Given the numbers, the analysts are bullish, with the mean price target sitting at $596.65/share, representing a 7.31% gain.
It is also important to note that the high price target is $700/share, representing a 25.90% upside, while the low price target is $400/share, representing a -28.06% downside.
The big money is also quite involved, with 66% of Nvidia being owned by institutions. Top holders include The Vanguard Group, Fidelity Management & Research, and BlackRock Institutional Trust.
On a technical basis, Nvidia has been flat up until quite recently. According to the six-month charts, the MACD has been running flat within a tight range around -1.64.
The six-month charts are also indicating an RSI of 59.78 and CCI of 242.76, sending mixed results.
In short, Nvidia is a solid long-term play given growing PC and GPU demand, the future of AI, and management’s history of outperforming.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.