Shoud You Buy NVIDIA Stock Today?

by Rob Otman

NVIDIA (Nasdaq: NVDA) is a $59 billion company today. Investors that bought shares one year ago are sitting on a 168.65% total return. That's above the S&P 500's return of 14.99%.

NVIDIA stock is beating the market, but does that make it a good buy today? To answer this question we've turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.

Our system looks at six key metrics...

Earnings-per-Share (EPS) Growth: NVIDIA reported a recent EPS growth rate of 210.53%. That's above the semiconductor industry average of -145.36%. That's a great sign. NVIDIA’s earnings growth is outpacing competitors.

Price-to-Earnings (P/E): The average price-to-earnings ratio of the semiconductor industry is 58.04. And NVIDIA stock’s ratio comes in at 38.05. It's trading at a better value than many of its competitors.

Debt-to-Equity The debt-to-equity ratio for NVIDIA stock is 48.87. That's below the semiconductor industry average of 59.51. The company is less leveraged.

Free Cash Flow per Share Growth NVIDIA’s FCF has been lower than its competitors over the last year. That's not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.

Profit Margins The profit margin of NVIDIA comes in at 30.14% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. NVIDIA’s profit margin is above the semiconductor industry average of 14.71%. So that's a positive indicator for investors.

Return on Equity Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for NVIDIA stock is 32.18%, and that's above its industry average ROE of 14.19%.

NVIDIA stock passes five of our six key metrics today. That's why our Investment U Stock Grader rates it as a strong buy.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That's why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.

Thoughts on this article? Leave a comment below.

IU Stock Grader