Is NVIDIA Corporation (NVDA) a Buy?

Valuations and Metrics

NVIDIA Corporation (NASDAQ:NVDA) currently looks more or less fairly valued, with the stock trading at 15.3 times trailing earnings. QUALCOMM, Inc. (NASDAQ:QCOM) is a bit more expensive at 18.2 times trailing earnings, but also has considerably higher growth. While NVIDIA has been improving its gross margin, it’s still not up to Qualcomm’s level, the company achieving around 62%. NVIDIA’s price-to-sales of 2.04 is quite reasonable, as is the price-to-book at 1.82. NVIDA’s return on equity of 12.73% is decent, and they furthermore have a great balance sheet with nearly no debt and some $3.71 billion in cash.

The Bottom Line

After several tough years due to the steep decline in PC sales, things seem to be improving for NVIDIA. The company is doing a fairly good job of keeping up with the mobile chip market, and still has a strong position in the PC GPU market. The company’s prospects for the rest of the year look encouraging, and with quite a fair valuation, the stock could see more upside through the year.

The article This Chipmaker Is Shaping Up for a Good Year originally appeared on Fool.com and is written by Daniel James.

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