Once seemingly unstoppable investments, the tide has significantly changed for semiconductor stocks in 2022, with deep valuation slashes widespread across the industry.
To put it into perspective, the Zacks Semiconductor – General Industry has decreased more than 30% year-to-date, extensively underperforming the general market.
One titan residing in the industry, NVIDIA NVDA, is on deck to unveil Q2 results on Wednesday, August 24th, after market close.
NVIDIA is the worldwide leader in visual computing technologies and is credited as the inventor of the highly successful graphic processing unit (GPU).
Currently, the company carries a Zacks Rank #4 (Sell) with an overall VGM Score of a D.
How does the semiconductor titan stack up heading into the quarterly report? Let’s take a closer look.
Share Performance & Valuation
It’s been a very challenging road for NVDA shares in 2022, down more than 40% and vastly underperforming the general market.
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Over the last month, NVDA shares have continued to lag the S&P 500, remaining flat.
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In addition, it’s no secret that NVIDIA shares trade at steep valuation multiples, further displayed by its Value Style Score of an F.
The company’s 56.4X forward earnings multiple is well above its five-year median of 48.9X and represents a 130% premium relative to its Zacks Computer and Technology Sector.
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Quarterly Estimates
Analysts have significantly pulled back their quarterly estimates over the last 60 days, with eight downwards revisions hitting the tape. The Zacks Consensus EPS Estimate of $0.59 reflects a steep 43% drop-off in quarterly earnings year-over-year.
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Still, the company’s top-line is expected to register some growth – NVDA is projected to have generated $6.7 billion in revenue throughout the quarter, penciling in a modest 3% uptick from year-ago quarterly sales of $6.5 billion.
Quarterly Performance & Market Reactions
NVIDIA has been on a blazing-hot earnings streak, exceeding the Zacks Consensus EPS Estimate in 14 consecutive quarters. Just in its latest print, the company penciled in a 4.6% bottom-line beat.
Top-line results have also been remarkable; NVDA has chained together 13 consecutive revenue beats. Below is a chart illustrating the company’s revenue on a quarterly basis.
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In addition, the market has liked what it’s seen from NVDA as of late, with shares moving upwards following two of the company’s three previous quarterly prints.
Putting Everything Together
NVDA shares have been the victim of a deep double-digit valuation slash year-to-date. And over the last month, shares have still lagged the general market.
The company carries steep valuation multiples, well above the five-year median and nowhere near its Zacks Sector average.
Analysts have been super bearish for the quarter to be reported, with estimates indicating a decreasing bottom-line and an increasing top-line.
Furthermore, the semiconductor titan has consistently exceeded quarterly estimates, and the market has reacted favorably following the prints as of late.
Heading into the release, NVIDIA NVDA carries a Zacks Rank #4 (Sell) with an Earnings ESP Score of -13%.
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