So the current leader of the financial bloggers stock picking contest is Smarty with 100% allocation to Nvidia Corp. (NVDA). In the first two (2) day of this competition, the stock was up more than 9% from the close of April 2008. With that kind of action, I decided to write a financial analysis review of the company.
To start the first post, I would like to provide an overview to NVDA using some of the tools I have shared in my posts:
Company Overview, taken from latest 10-k filings:
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or the GPU. Our products are designed to generate realistic, interactive graphics on consumer and professional computing devices. We serve the entertainment and consumer market with our GeForce products, the professional design and visualization market with our Quadro products, and the high-performance computing market with our Tesla products. We have four major product-line operating segments: the GPU Business, the professional solutions business, or PSB, the media and communications processor, or MCP, business, and the consumer products business, or CPB. We were incorporated in California in April 1993 and reincorporated in Delaware in April 1998. Our headquarter facilities are in Santa Clara, California.
Despite rising+ 9% in the first few days of May for the competition, NVDA is down-40% from the start of the year. When looking at the 5-year performance, any long-term shareholder would be happy with a total return of 436%, annualizing at 32%. Another positive stock performance metric for NVDA is achieving this growth when the S&P 500 returned an annualized rate of 3.5%, creating a 9.3x over the broad market index.
5-year Income Statement Trends:
Looking at this chart, it doesn’t get any better than this…All of the metrics are increasing with a 5-year compounded annual growth rate of 22.4% on sales and 80.9% on net income.
Aside from the sales and net income metrics, NVDA isn’t as exciting on the rest of the metrics for my value scorecard. By looking at the growth metrics above, this stock falls into the growth category. The price to book seems rich at 5.9x but with no debt and a FCF yield of 7.4%, not that bad…. I will compare these metrics to the competitor set to provide a benchmark.
Post 2: Detailed Income Statement Review
Post 3: Detailed Balance Sheet Review
Post 4: Cash Flow Statement Review
Post 5: Ratios and Competitor analysis
Post 6: Insiders & Major Holders review
Post 7: Valuation: A Discounted Cash Flow Approach
If you would like me to add any additional sections, please feel free to email me or comment below.
Author Disclosure: At the time of this posting, the author does not own/short any NVDA stock.
Sources: Company website, Edgar database, Yahoo Finance, Morningstar.com