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 $894.63, NVIDIA Corp has witnessed a daily gain of 1.45%, marked against a three-month change of 63.91%. 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 $2.24 trillion and sales of $60.92 billion, NVIDIA Corp has established itself as a powerhouse in the tech industry. The company's operating margin stands at a healthy 54.12%, indicating its efficiency in managing expenses relative to its revenue. NVIDIA's expansion into data center networking solutions further solidifies its position as a key player in handling complex workloads, leveraging its AI GPUs and Cuda software platform for AI model development and training.
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 62.03, 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 significantly over the past five years, with the most recent figure at 54.12%. Furthermore, NVIDIA Corp's Gross Margin has also seen a consistent rise, reaching 72.72% in the latest year. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms NVIDIA Corp's solid financial situation, and its 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 EBITDA over the past few years, with a three-year growth rate of 84.6, highlighting 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. The company's strategic initiatives, strong market position, and innovative technology offerings make it a compelling choice for investors looking for growth and stability. With the tech industry's rapid evolution and NVIDIA Corp's consistent financial performance, the company is poised to maintain its leadership and potentially deliver superior returns to its shareholders. Are you ready to explore more companies with similar potential? 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.
