Nvidia Corporation (NVDA) Surging Higher of Late

Over the past five sessions, Nvidia Corporation (NVDA) has pulled in nice gains, moving higher 4.31% over the past five sessions.  This places the stock on the winner’s list for the week. Looking a bit further out we note that the stock is 5.23% for the past 4-weeks, 22.37% over the past 13 weeks and 162.43% over the past year. 

Now we’ll take a look at how the fundamentals are stacking up for Nvidia Corporation (NVDA). Fundamental analysis takes into consideration market, industry and stock conditions to help determine if the shares are correctly valued. Nvidia Corporation currently has a yearly EPS of 3.48. This number is derived from the total net income divided by shares outstanding. In other words, EPS reveals how profitable a company is on a share owner basis.

Another key indicator that can help investors determine if a stock might be a quality investment is the Return on Equity or ROE. Nvidia Corporation (NVDA) currently has Return on Equity of 32.57. ROE is a ratio that measures profits generated from the investments received from shareholders. In other words, the ratio reveals how effective the firm is at turning shareholder investment into company profits.

A company with high ROE typically reflects well on management and how well a company is run at a high level. A firm with a lower ROE might encourage potential investors to dig further to see why profits aren’t being generated from shareholder money.

Another ratio we can look at is the Return on Invested Capital or more commonly referred to as ROIC. Nvidia Corporation (NVDA) has a current ROIC of 26.98. ROIC is calculated by dividing Net Income – Dividends by Total Capital Invested. Similar to ROE, ROIC measures how effectively company management is using invested capital to generate company income. A high ROIC number typically reflects positively on company management while a low number typically reflects the opposite.

Turning to Return on Assets or ROA, Nvidia Corporation (NVDA) has a current ROA of 19.36. This is a profitability ratio that measures net income generated from total company assets during a given period. This ratio reveals how quick a company can turn it’s assets into profits. In other words, the ratio provides insight into the profitability of a firm’s assets. The ratio is calculated by dividing total net income by the average total assets.

A higher ROA compared to peers in the same industry, would suggest that company management is able to effectively generate profits from their assets. Similar to the other ratios, a lower number might raise red flags about management’s ability when compared to other companies in a similar sector.