Nvidia Reports 2019 Q1 Earnings

Investment Analysis Clubs Saul’s Investing Discussions
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From the earnings report:

“We had a strong quarter with growth across every platform,” said Jensen Huang, founder and chief executive officer of NVIDIA. “Our datacenter business achieved another record and gaming remained strong.

“At the heart of our opportunity is the incredible growth of computing demand of AI, just as traditional computing has slowed. The GPU computing approach we have pioneered is ideal for filling this vacuum. And our invention of the Tensor Core GPU has further enhanced our strong position to power the AI era,” he said.

Read the entire release at https://nvidianews.nvidia.com/news/nvidia-announces-financia…

Shares are down in AH trading about 3%, but the numbers look awesome. Guidance looks fine too, but I’m not sure what expectations were heading into the quarter:


Revenue (billions)		Q1		Q2		Q3		Q4
2017				1.31		1.43		2.00		2.17
2018				1.94		2.23		2.64		2.91
2019				3.21					

EPS (non-GAAP)		        Q1		Q2		Q3		Q4
2017				0.46		0.53		0.94		1.13
2018				0.85		1.01		1.33		1.72	
2019				2.05		

Gross Margin (non-GAAP)	        Q1		Q2		Q3		Q4
2017						58.1		59.2		60.2	
2018				59.6		58.6		59.7		62.1
2019				64.7

Current (2019 Q1 Earnings):

Revenue Growth (billions)
2018 Q1 TTM Revenue = 7.54
2019 Q1 TTM Revenue = 10.99
Year Over Year Revenue Growth = 45.8%

EPS Growth (non-GAAP)
2018 Q1 TTM Earnings = 3.45
2019 Q1 TTM Earnings = 6.11
Year Over Year EPS Growth = 77.1%

P/E (Check Current Price) = 260.13/6.11 = 42.6

Trailing 1Y PEG = 42.6/77.1 = 0.55

Quick and dirty highlights:
Gaming revenue: $1.72B, up 68% YOY
Datacenter revenue: $701M, up 71% YOY
Professional visualization revenue: $251M, up 22% YOY
Automotive revenue: $145M, up 4% YOY

Matt
Long NVDA
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See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx

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Matt, things do not always go the same way each year of course. But if you take 2017 earnings, and use the same distribution for 2018 for Nvidia starting w the incredible earnings of just over $2.00 in Q1, Nvidia is on track to hit $10 in earnings this year!

That brings this year’s PE DOWN TO 25 and enterprise value of course even lower. And the press is still out there saying Nvidia is selling for 40x forward earnings.

Tinker

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Just wanted to put the numbers down to look at it:

2018-Q1 $0.82
2018-Q2 $0.92
2018-Q3 $1.33
2018-Q4 $1.57
2019-Q1 $1.98
2019-Q2 $2.22 est
2019-Q3 $3.21 est
2019-Q4 $3.79 est

2019 earnings $11.20 est
$257.84 / $11.20 = 23.02 Forward P/E

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those figures are mind blowing, if they turn out to be correct.
From Q1 2018 to Q4 2019 , a more than 4 fold increase. All this for a price of $256, a forward P/E not much beyond many stodgy low to no growth SP 500 companies.

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2019-Q1 $1.98
2019-Q2 $2.22 est
2019-Q3 $3.21 est
2019-Q4 $3.79 est

2019 earnings $11.20 est
$257.84 / $11.20 = 23.02 Forward P/E

Forward P/E of 23!!!

That is darn cheap with that growth rate…and that growth rate is basically before autonomous driving revenues are at a meaningful level.

This one might stand a chance to get up to the half trillion level within the next 5 years.

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2019 earnings $11.20 est
$257.84 / $11.20 = 23.02 Forward P/E

Hmmmm, back to the mysterious world of investing board guesstimates.

Here’s what the Street has, fwiw.

Bloomberg EPSadj for NVDA:

FY2019: $7.76 or 33x
FY2020: $8.50 or 30.1x.

If NVDA was actually at 23x, I’m pretty sure every growth investor, and some value, would buy it!

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I just wanted to add on some more numbers, specific to crypto:

Nvidia reported $289M revenues for a crypto-specific SKU. This was reported in OEM revenues, instead of Gaming revenues. Assuming GM of 60%, this crypto SKU added $173M in profit, or $0.277 per share. There was also an unmeasured about of crypto sales in the Gaming segment ($1723M). IMO, the total crypto revenue was at least $300M-$500M. This has contributed greatly to the growth rate YoY. I have no expectations that the crypto revenue will continue to grow at the current pace.

On a side note, AMD reported some $160M in crypto revenue last quarter as part of ~$500M in GPU revenues. IMO, AMD has been unable to ramp up their production to capture more share. This is probably due to 14nm capacity limitations at GloFo. If AMD had more wafer starts, AMD would have taken sales from Nvidia.

Still bullish due to Data Center plus Auto potential.

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Nvda just put up $1.98 in EPS for the 1st quarter, and the next 3 quarters will be significantly higher.

Clearly, the Bloomberg estimate of $7.76 for FY2019 is way to low.

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Here’s what the Street has, fwiw.

Bloomberg EPSadj for NVDA:

FY2019: $7.76 or 33x
FY2020: $8.50 or 30.1x.

If NVDA was actually at 23x, I’m pretty sure every growth investor, and some value, would buy it!

As Jimb05 said, I am pretty sure those EPS estimates are quite out of date now, Najdorf. While I am still a “lowly retail investor”, I like to think I’m a mix of a growth and value investor. Thus, I bought more today.

After doing a quick portfolio review today, consolidating my taxable and IRA accounts for the first time, and noticing that I have a decent cash cushion to put to use, I bought some NVDA shares in my IRA in the after-hours just a bit ago at $254.35, using part of the proceeds from my not-fully-anticipated/definitely larger-than-expected TTD call option windfall. [Sorry about that sentence length]

I also bought some NVDA May 18 2018 $260 call options within my IRA during the day today, at an average cost basis of $3.02 per contract. Late day price movement looked to me like there may have been some intentional pinning to keep the closing price under $255.

Not suggesting that what I do is a great indicator…but still sharing what I did today on the buying side.

volfan84
long NVDA, now in IRA as well as taxable account, also with short-term May 18 2018 $260 call options

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Ironically enough, this just-published article is about the very topic of NVDA’s P/E ratio (and that chip stock P/E’s are getting cheaper). It definitely makes logical sense for P/E ratios to decline over time as revenue bases get larger.

https://www.marketwatch.com/story/red-hot-chip-stocks-are-ac…

This article lists the “cheaper” forward P/E for NVDA as 40.0. 40 is higher than even those out-of-date values posted up-thread…so if 40 is a relatively low/cheap forward P/E for NVDA, how low/cheap would the postulated 23 be?

I won’t be surprised if there are some $350 price target updates next week for NVDA…some analyst may even throw a $400 out there.

volfan84

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“I won’t be surprised if there are some $350 price target updates next week for NVDA…some analyst may even throw a $400 out there.”

This morning B Riley/FBR set a $300 target, and Bank of America/Merrill Lynch placed a $340 target.
On the lower side Stifel set their target higher to $243 and JPM’s target was raised to $255.

Rob

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576,

Those numbers are also before Nvidia buys back shares.

Perhaps crypto currency accelerated things. But jeepers, current estimates need to be materially revised upward. Shares may have dawdled today. But they also rose to all time highs into earnings. Yeah, share price is going to go up from here. When I said $10 earnings this year I was being conservative.

Tinker

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