NVIDIA Corp (NVDA, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $887.45, NVIDIA Corp has witnessed a daily loss of 2.06%, marked against a three-month change of 63.2%. A thorough analysis, underlined by the GF Score, suggests that NVIDIA Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 9/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a lower GF Value rank, GuruFocus assigned NVIDIA Corp the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding NVIDIA Corp Business
NVIDIA Corp is a leading developer of graphics processing units (GPUs), a technology that has evolved from enhancing PC gaming experiences to becoming a crucial component in artificial intelligence applications. With a market cap of $2.22 trillion and sales of $60.92 billion, NVIDIA Corp boasts an impressive operating margin of 54.12%. The company's innovative software platform, Cuda, is used for AI model development and training, and it is expanding its data center networking solutions to manage complex workloads effectively.
Financial Strength Breakdown
According to the Financial Strength rating, NVIDIA Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for NVIDIA Corp stands impressively at 128.29, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 63.63, NVIDIA Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.18, NVIDIA Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows NVIDIA Corp's impressive standing among its peers in generating profit. NVIDIA Corp's Operating Margin has increased to 54.12% over the past five years, indicating a growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms NVIDIA Corp's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding and operating efficiency. NVIDIA Corp's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, NVIDIA Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 54.3%, which outperforms better than 94.71% of companies in the Semiconductors industry. Moreover, NVIDIA Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years, with a three-year growth rate of 84.6, accentuating the company's continued capability to drive growth.
Conclusion: NVIDIA Corp's Position for Outperformance
Considering NVIDIA Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. With a solid foundation and a clear trajectory for expansion, NVIDIA Corp stands as a compelling choice for investors seeking robust returns. As the company continues to innovate and lead in the semiconductor and AI spaces, its financial metrics suggest a strong potential for sustained market leadership.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
