It’s time to break down one of the most popular names within the markets. Here is the breakdown on $NVDA, otherwise known as Nvidia.
Current Price: $549.80
52/Wk High: $615.90
52/Wk Low: $180.68
Market Cap: $340.3 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.
Digging into the numbers, Nvidia beat Q4 expectations with an EPS of $3.10, much better than the analysts consensus EPS estimate of $2.81. On a year over year basis, EPS improved 64.02%.
Revenues also improved significantly, with revenues totaling $5 billion for the quarter, representing an increase of 61% on a year over year basis. As for the full year, Nvidia revenues totaled $16.68 billion, representing a 53% increase on a year over year basis.
Operating income improved as well, increasing 52% on a year over year basis to $1.507 billion while net income totaled $1.457 billion in Q4, representing a 53% jump year over year.
On the downside, gross margin dropped by 180 basis points to 63.1%. For comparison, the Q4 2021 gross margin was 64.9%.
As for expenses, operating expenses totaled $1.650 billion, representing a 61% increase on a year over year basis.
Briefly taking a look at the full year, operating income increased by 59%, totaling $4.532 billion, while net income increased by 55% to $4.332 billion.
Overall management was upbeat about the quarter.
“Our pioneering work in accelerated computing has led to gaming becoming the world’s most popular entertainment, to supercomputing being democratized for all researchers, and to AI emerging as the most important force in technology,” leadership noted.
Guidance is strong as well, with management expecting Q1 2022 revenues around $5.30 billion and for gross margin to land within a range of 63.8% to 66%.
Shifting into 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
On a valuation basis, Nvidia does trade at a premium.
Price to Earnings: 86.98x
Forward Price to Earnings: 45.52x
Price to Sales: 22.15x
Price to Book: 21.46x
Price to Cash Flow: 50.73x
Management has been quite effective as well.
Return on Equity: 29.78%
Return on Assets: 18.79%
Return on Invested Capital: 21.45%
Given the numbers the analysts are bullish with a mean price target of $649.20/share, representing an 18% gain.
It is also important to note that the high price target is $800/share, representing a 45.41% gain, while the low price target is $500/share, representing a -9.12% loss.
The big money is quite involved as well with 66.04% of Nvidia being owned by institutions. Top holders include Fidelity Management & Research, The Vanguard Group, and BlackRock Institutional Trust.
On a technical basis Nvidia has been mostly flat in recent months. According to the six-month charts the MACD recently crossed to the downside within a range of 11.63 down to 5.8.
The six-month charts are also indicating an RSI of 46.44 and CCI of -61.39, both of which are on the low end.
In short, Nvidia is a strong company that continues to grow revenues, expand into the video game space, and see strong demand from the consumer.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.