Why Nvidia (NVDA) Is Up Today

NEW YORK (TheStreet) -- Nvidia  (NVDA) was gaining 1.6% to $17.10 on Thursday following fourth-quarter earnings that beat analysts' estimates.

In the fourth quarter, the chipmaker posted earnings of 24 cents a share, beating analysts' estimates of 18 cents a share. Revenue increased 3% to $1.14 billion; analysts expected revenue of $1.053 billion.

Nvidia's better-than-expected results came as revenue from GPU sales grew 14% year over year in the quarter to $947 million. Revenue from the company's Tegra line of mobile processors grew 18% sequentially to $131 million.

For the first quarter, Nvidia said it expects revenue of about $1.05 billion; analysts forecast revenue of $1 billion for the quarter.

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TheStreet Ratings team rates NVIDIA CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:

"We rate NVIDIA CORP (NVDA) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, NVDA's share price has jumped by 26.74%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NVDA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 3.53, 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 61.40%. 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 11.26% trails the industry average.
  • NVDA, with its decline in revenue, underperformed when compared the industry average of 5.3%. Since the same quarter one year prior, revenues fell by 12.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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