Nvidia (NASDAQ: NVDA), a manufacturer of graphics chips, will announce its second-quarter earnings report on August 19, 2020. Nvidia's stock started the year 2020 with $239.91 per share and has been having a stellar run since then, gaining around 93% YTD to close at 462.56 on August 14, 2020. The stock has gained 190% in the last 12 months against the industry gain of 46%.
EPS and Revenue Estimates
Analysts at the Wallstreet expect higher revenue of $3.65 billion, with an increase of 41.7% from Q2 2019. Moreover, the analysts estimate earnings per share of $1.93, registering a growth of 55.7% as compared to the same quarter last year. Nvidia posted an earnings surprise of 6.51% in the first quarter when it delivered first-quarter EPS of $1.8 against the analysts' forecast of $1.69.
Earnings by Segments
The company topped, for the first time, $1 billion data-center sales at the start of the year 2020. Nvidia will register sales of its new data-center product — the A100 graphics-processing unit, which was launched in May 2020 — in its second-quarter results. The new chip will replace Nvidia’s old chips, Turing and Volta, and will present a single solution for cloud-based service providers. The company has already supplied its new data-center chips, called Ampere, to large cloud-computing providers, such as Amazon, Microsoft, Azure, and Google.
So far, the gaming segment has been the leading revenue-generator for Nvidia, with the data-center segment lagging. But with the data-center sales crossing $1 billion in Q1 2020, the data-center segment, analysts believe, will surpass the gaming-segment sales. The analysts have forecasted gaming sales of $1.4 billion compared with the data-center sales of $1.72 billion. In July, Nvidia also beat Intel as the largest chip-manufacturing company by market capitalization.
Financial Ratios and Metrics
Nvidia boasts a 25% return on equity (trailing 12 months), which is way higher than the industry average of 11%. This shows that the company has been efficiently using the shareholders' equity to generate returns for its shareholders. The 25% ROE implies that for every $1 invested by the shareholders, the company is generating $0.25 as a return. Moreover, on average, the company has been able to register a 30% growth in its net income over the past five years, compared with the industry average of 18% during the same period. The company has a price-to-earnings ratio of 85 (trailing 12 months data) as compared to the industry average of 37. The company has a PEG (Price/ earnings to growth) ratio of 5.
Most of the analysts at the Wallstreet are upbeat about the stock and have set a target price for the stock at about $500.
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