Rating Change #9
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- NVDA's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.74, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for NVIDIA CORP is rather high; currently it is at 50.10%. Regardless of NVDA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVDA's net profit margin of 6.50% is significantly lower than the same period one year prior.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 55.3% when compared to the same quarter one year ago, falling from $135.22 million to $60.44 million.
- Net operating cash flow has significantly decreased to -$9.21 million or 105.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
NVIDIA Corporation provides graphics chips for use in smartphones, personal computers (PC), tablets, and professional workstations markets worldwide. It operates in three segments: Graphic Processing Unit (GPU), Professional Solutions Business (PSB), and Consumer Products Business (CPB). The company has a P/E ratio of 15.4, equal to the average electronics industry P/E ratio and below the S&P 500 P/E ratio of 17.7. NVIDIA has a market cap of $7.8 billion and is part of the
industry. Shares are down 9% year to date as of the close of trading on Friday.
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