Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 12.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 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 3.91, 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 52.90%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.40% trails the industry average.
- Net operating cash flow has decreased to $181.49 million or 25.74% when compared to the same quarter last year. Despite a decrease in cash flow of 25.74%, NVIDIA CORP is in line with the industry average cash flow growth rate of -27.92%.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, NVIDIA CORP's return on equity is below that of both the industry average and the S&P 500.
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 14.1, below the S&P 500 P/E ratio of 17.7. NVIDIA has a market cap of $7.18 billion and is part of the technology sector and electronics industry. Shares are down 16.4% year to date as of the close of trading on Monday.
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