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In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Lam Research (NASDAQ:LRCX) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.
Lam Research is one of the largest semiconductor wafer fabrication equipment, or WFE, manufacturers in the world. It specializes in the market segments of deposition and etch, which entail the buildup of layers on a semiconductor and the subsequent selective removal of patterns from each layer. Lam holds the top market share in etch and holds the clear cut second share in deposition. It is more exposed to memory chipmakers for DRAM and NAND chips. It counts as top customers the largest chipmakers in the world, including TSMC, Samsung, Intel, and Micron.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Lam Research Corp | 35.40 | 15.71 | 8.99 | 11.89% | $1.23 | $1.8 | -1.96% |
| ASML Holding NV | 47.12 | 24.34 | 12.84 | 8.98% | $1.61 | $2.7 | -21.59% |
| Applied Materials Inc | 25.26 | 10.04 | 6.96 | 9.67% | $2.15 | $3.15 | -0.91% |
| KLA Corp | 40.06 | 33.29 | 10.90 | 19.6% | $0.88 | $1.37 | -2.99% |
| Teradyne Inc | 53.33 | 8.56 | 8.62 | 2.53% | $0.1 | $0.34 | -2.87% |
| Entegris Inc | 62.48 | 5.74 | 5.87 | 1.32% | $0.2 | $0.35 | -16.41% |
| Enphase Energy Inc | 57.47 | 16.44 | 8.59 | -1.69% | $0.01 | $0.12 | -63.73% |
| Onto Innovation Inc | 82.06 | 6.38 | 13.49 | 2.66% | $0.06 | $0.12 | 14.9% |
| Amkor Technology Inc | 21.58 | 2.02 | 1.27 | 1.48% | $0.23 | $0.2 | -22.05% |
| FormFactor Inc | 44.50 | 4.87 | 6.88 | 2.38% | $0.01 | $0.06 | 0.76% |
| Axcelis Technologies Inc | 14.82 | 4.05 | 3.29 | 5.84% | $0.06 | $0.12 | -0.65% |
| Photronics Inc | 12.73 | 1.75 | 1.95 | 2.62% | $0.07 | $0.08 | 2.48% |
| ACM Research Inc | 17.73 | 1.81 | 2.38 | 2.23% | $0.03 | $0.08 | 104.95% |
| PDF Solutions Inc | 593.33 | 6.07 | 8.31 | -0.17% | $-0.0 | $0.03 | 1.35% |
| Aehr Test Systems | 22.10 | 3.84 | 4.74 | -1.69% | $-0.0 | $0.0 | -56.04% |
| inTest Corp | 16.59 | 1.23 | 0.97 | 0.68% | $0.0 | $0.01 | -6.56% |
| Average | 74.08 | 8.7 | 6.47 | 3.76% | $0.36 | $0.58 | -4.62% |
By conducting an in-depth analysis of Lam Research, we can identify the following trends:
The Price to Earnings ratio of 35.4 is 0.48x lower than the industry average, indicating potential undervaluation for the stock.
The elevated Price to Book ratio of 15.71 relative to the industry average by 1.81x suggests company might be overvalued based on its book value.
The stock's relatively high Price to Sales ratio of 8.99, surpassing the industry average by 1.39x, may indicate an aspect of overvaluation in terms of sales performance.
The company has a higher Return on Equity (ROE) of 11.89%, which is 8.13% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.23 Billion, which is 3.42x above the industry average, indicating stronger profitability and robust cash flow generation.
Compared to its industry, the company has higher gross profit of $1.8 Billion, which indicates 3.1x above the industry average, indicating stronger profitability and higher earnings from its core operations.
With a revenue growth of -1.96%, which surpasses the industry average of -4.62%, the company is demonstrating robust sales expansion and gaining market share.
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When assessing Lam Research against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
In terms of the debt-to-equity ratio, Lam Research is positioned in the middle among its top 4 peers.
This suggests a relatively balanced financial structure, where the company maintains a moderate level of debt while also utilizing equity financing with a debt-to-equity ratio of 0.62.
For Lam Research, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and premium valuation. In terms of ROE, EBITDA, gross profit, and revenue growth, Lam Research outperforms its industry peers, reflecting strong financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: LRCX
