Tonight, computer graphics specialist NVIDIA
What analysts say:
- Buy, sell, or waffle? This is no shy little flower. Thirty-two analysts are tracking NVIDIA's every move. Twelve of them want to buy, five want to sell, and the other 15 are just holding for now. In our Motley Fool CAPS database, it's a three-star stock, with 742 player ratings.
- Revenues. $866 million would satisfy the Wall Street consensus expectation. It would be a whopping 37% improvement over last year's $634 million.
- Earnings. The average analyst estimate calls for EPS of $0.43, up from $0.27 a year ago.
What management says:
In the last quarterly report, CEO Jen-Hsun Huang said that the future rests on new technologies (no argument there), and NVIDIA was rolling out "the most ambitious [chips] in the company's history," just at the "biggest confluence of technology changes to hit our industry in the last 10 years -- Windows Vista, DX10 and Blu-ray/HD." Is that why the warehouses are full of unsold chips, Jen-Hsun? We'll get back to that in a bit.
What management does:
If NVIDIA hits the Wall Street targets, trailing revenue growth will spike to about 29% while the trailing earnings improvement continues to stall, landing at 43% or so. So sales are accelerating, while earnings grow at a stellar, yet decreasing, rate.
This performance is real, too -- cash flow is consistently higher then the more easily manipulated net earnings. It even beats the operating income line across the calendar, just to show off.
|
7/2005 |
10/2005 |
1/2006 |
4/2006 |
7/2006 |
10/2006 |
|
|---|---|---|---|---|---|---|
|
Gross |
35.1% |
36.7% |
38.3% |
40.0% |
41.2% |
41.6% |
|
Operating |
10.7% |
12.9% |
14.9% |
16.2% |
17.2% |
18.0% |
|
Net |
9.0% |
10.4% |
12.7% |
13.2% |
13.2% |
13.6% |
|
FCF/Revenue |
13.9% |
17.1% |
22.1% |
19.9% |
17.6% |
23.9% |
|
Y-O-Y Growth |
7/2005 |
10/2005 |
1/2006 |
4/2006 |
7/2006 |
10/2006 |
|---|---|---|---|---|---|---|
|
Revenue |
18.8% |
20.5% |
18.2% |
16.6% |
15.4% |
22.3% |
|
Earnings |
253.6% |
213.8% |
239.9% |
146.3% |
68.7% |
59.1% |
|
Efficiency Ratios |
7/2005 |
10/2005 |
1/2006 |
4/2006 |
7/2006 |
10/2006 |
|---|---|---|---|---|---|---|
|
Return on Capital |
12.7% |
15.1% |
16.3% |
17.4% |
19.0% |
19.9% |
|
Return on Assets |
9.4% |
11.1% |
12.2% |
13.1% |
14.2% |
14.7% |
|
Return on Equity |
17.0% |
19.5% |
22.2% |
22.7% |
23.2% |
23.9% |
One Fool says:
If there's one cause for concern here, it's inventory levels. NVIDIA ended its third quarter with inventories 31.4% higher than year-ago levels, far outpacing the revenue growth. I'll keep a close eye on that part of the coming balance sheet, to see if the holidays and the release of Microsoft's
Competitors:
-
Advanced Micro Devices
(NYSE:AMD) -
Texas Instruments
(NYSE:TXN) -
Nokia
(NYSE:NOK) -
Intel
(NASDAQ:INTC) -
Silicon Image
(NASDAQ:SIMG)
NVIDIA is a Motley Fool Stock Advisor selection, and Intel and Microsoft are Inside Value picks. You can check out any of our newsletters with a free 30-day trial.
Fool contributor Anders Bylund is an AMD shareholder, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is always cutting-edge.
