Analysis of Nvidia
(ticker NVDA)
We analyze the company using seven metrics:
Competitive advantage
RM (Company Competitive Advantage Rating). This is a composite metric that assesses the presence of business characteristics that prevent other firms from successfully competing with the company. The RM for NVDA is 39.15
Is that a lot or a little? This RM value indicates that the company ranks among the top 25% of U.S. companies in the “Competitive Advantage” rating.
Growth
Over the past 5 years, Nvidia’s sales have grown by an average of 39.06% per year:
- 2019 - $11,716 million
- 2024 - $60,922 million
Is that a lot or a little? The average annual sales growth for all U.S. companies during this period was 9.6% per year.
Earnings per share over the past 5 years have grown by an average of 48.07% per year:
- 2019 - $0.17 per share
- 2024 - $1.21 per share
The average annual growth in earnings per share for U.S. companies during this period was 7.8% per year.
The growth rating (RG) for Nvidia is: RG - 54.47
This means that the company ranks among the top 25% of U.S. companies in this rating.
Company assets
Over the past 5 years, Nvidia’s assets have grown by an average of 37.67% per year:
- 2019 - $13,292 million
- 2024 - $65,728 million
The fact that the company’s assets grew more slowly than its profits and revenue speaks to the effectiveness of its management: executives were able to generate more profit per unit of the company’s assets.
Debt
Over the past 5 years, Nvidia’s debt has grown by an average of 41.93% per year:
- 2019 - $3,950 million
- 2024 - $22,750 million
The company’s debt grew faster than its assets, which is bad, as the share of debt in the company’s total assets increased.
However, the company’s debt as of 2024 amounted to 34.61% of its assets. The average U.S. company has debt amounting to 40.37% of its total assets. It can be concluded that the company is less burdened by debt than the average U.S. company.
Net profit margin
An important metric is the net profit margin. This metric indicates how many cents of net profit a company’s $1 in sales generates for investors. It is possible to have high sales volume but generate only a small profit from it. This is bad for investors. How does the company under review fare with this metric? The company’s net profit margin is 48.85%
In other words, the company generates 48.85 cents in net profit for its shareholders for every dollar of sales. Is that a lot or a little? On average, U.S. companies generate 3.3 cents in profit for their shareholders for every dollar of sales. It can be concluded that the company is significantly more efficient in terms of generating profit than the average U.S. company.
Return on assets
Return on assets is an important metric. To operate, any company needs equipment and inventory, which together constitute the company’s assets. That said, some businesses require a lot of equipment and materials. To generate a profit of one dollar, a significant amount of money must be invested in the company’s assets. An example of such a business is automobile manufacturing. On the other hand, there are businesses that do not require a large amount of assets to generate a profit of one dollar. A coffee shop, for example, is such a business.
If we divide a company’s net profit by the value of its assets, we can determine the return - in terms of annual net profit - that shareholders will receive on the funds they have invested in the company’s assets. Of course, the higher this return, the better.
What percentage of the company’s assets does its annual net profit represent? 2024 - 45.27%
The average U.S. company has a return on assets in the form of annual net profit of 0.9%. In other words, it takes Nvidia 2.2 years to return to investors, in the form of net profit, the money spent on its assets. For the average U.S. company, this would take 111 years.
It can be concluded that the return in the form of annual net profit relative to the company’s assets is significantly higher than that of the average U.S. company.
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