It’s time to revisit a mega name. Here is the break on $NVDA, otherwise known as Nvidia.
Current Price: $627.18
52/Wk High: $628.00
52/Wk Low: $257.00
Market Cap: $388.9 Billion
Dividend: $0.16 / 0.11% Yield
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.
Previously 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.
In recent news, Nvidia impressed investors with a levy of new products and deals at their investor day conference.
During the investor conference Nvidia unveiled a next-generation AI processor for autonomous vehicles, its entrance into the data center CPU market with its Grace CPU, and a bevy of software and partnership announcements.
Digging into the numbers, Nvidia beat Q4 2021 expectations with an EPS of $3.10, better than the analysts EPS consensus estimate of $2.81. On a year over year basis, EPS improved by 64.02% year over year.
Revenues impressed as well, jumping by 61% year over year to a very strong $5.00 billion. For reference, the Q4 2020 revenues level was $3.11 billion.
Revenue growth by segment for Q4;
Gaming: 67% YoY
Data Center: 97% YoY
Professional Visualization: -7% YoY
Automotive: -11% YoY
As for margins, Nvidia reported a Q4 gross margin of 63.1%, stronger than the previous quarters gross margin of 62.6% but 180 basis points weaker than the Q4 2020 gross margin level of 64.9%.
Operating income on the other hand jumped 52% year over year to a strong $1.507 billion. On a quarter over quarter basis, operating income increased by 8%.
Net income was impressive as well, increasing by 53% year over year to $1.457 billion. On a quarter over quarter basis net income jumped by 9%.
As for expenses, operating expenses increased by 61% year over year to $1.650 billion, which is to be expected given the significant increase in business.
Looking back on the full year, Nvidia reported strong FY 2021 revenues of $16.675 billion, representing a 53% gain on a year over year basis.
Furthermore, Nvidia reported a full year gross margin of 65.6% (up 310 bps YoY) and an operating income of $6.803 billion, representing a 82% increase year over year.
Shifting into the balance sheet the numbers are solid.
Total Debt: $6.963 Billion
Total Liabilities: $11.898 Billion
Total Assets: $28.791 Billion
Cash & Short Term Inv: $11.561 Billion
On a valuation basis, Nvidia does trade at a premium.
Price to Earnings: 91.07x
Forward Price to Earnings: 41.83x
Price to Sales: 23.19x
Price to Book: 23.02x
Price to Cash Flow: 58.04x
Management has been effective.
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 $664.60/share, representing a 5.97% upside.
The high price target is $800/share, representing a 27.56% gain, while the low price target is $500.00/share, representing a 20.28% downside.
The big money is quite involved, with 66.08% of Nvidia being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and Fidelity Management & Research.
On a technical basis, Nvidia is strong. According to the six-month charts the MACD is moving with strong upside momentum within a range of 17.94 down to 6.94.
The six-month charts are also indicating an RSI of 73.18 and CCI of 201.26, both of which are on the high end.
In short, Nvidia ($NVDA) is a strong “semiconductor AND software” company with a motivated management team, expanding revenues, and plenty of growth ahead.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.