To Buy or Not to Buy: A Comprehensive Analysis of NVIDIA Stock

 

To Buy or Not to Buy: A Comprehensive Analysis of NVIDIA Stock

To Buy or Not to Buy: A Comprehensive Analysis of NVIDIA Stock

so Nvidia ran up 278 per of the past

year and with the latest earnings it has

shot through this Stratosphere and took

the entire Market with it so in today's

video we want to give you a little bit

of an in-depth view inside the true

valuation fundamentally of Nvidia

without the hype without the noise

what's the objective valuation of Nvidia

because everybody keeps asking the same

question which point makes Nvidia

overvalued 800 900 a th000 at which

point we're going to say well Nvidia is

just too expensive right because it is a

transformational company there's no

doubt look at the numbers you know 57%

growth over the past year look at the

operating profit look at the ebda it's

making 20 billion a year in operational

profit net income is

18.9 absolutely phenomenal company from

any single perspective you can think of

gross profit is

72.7% the numbers are absolutely insane

return in equity this is what the

investor got from this company 70%

return Equity it's probably the highest

we've seen in a while and you know the

real question is how expensive is this

32 price to sales 30 Price to Book 65

price to earnings at which point is this

too expensive so this is our own DCF

model right here on stock MVP and if I

do a little kind of reverse engineering

right here I can tell you how much

growth is built in into this current

price of 700 $85 and I want to do this

because I want to understand how much

risk am I buying at $800 a pop right so

let's reverse engineer this let's give

them an ibida growth of

40% with the current 10% 10% capex and

depreciation growth and a 10% discount

rate populate calculate that's it DCF

model is done you won't find a quicker

DCF modeling tool on the planet so right

now I'm scrolling up and I'm seeing

$555 DCF value based on what I just

entered so now I understand I have to

adjust my model let's do 50% 50% e

growth calculate 772 so right now I'm

pretty much on the money so basically

what this shows me is by reverse

engineering the current share price

right now if you're buying Nvidia you're

buying an assumption of 50% EB growth

per year consecutively for the next 5

years until 2029 that's the risk you're

buying whether Nvidia is going to

accomplish that not who knows maybe they

will maybe they won't there's a good

chance they will based on how good

they've been for the past two years but

don't forget this is a 5year assumption

this goes all the way to 2029 a lot can

change in 5 years and also beyond the

DCF valuation model which you can play

around here for example what happens if

Nidia Grows by 70% a year over the next

five years which is possible well in

that case this is a $1,400 stock and

it's going to double and make you 80%

what happens if Nvidia does only 30%

growth a year on average for the next 5

years well in that case you're going to

be losing quite a substantial amount of

money 50% so the sensitivity analysis

you can do here is kind of a a almost a

forgotten art because people do the ccfs

and they put in their assumptions and

they got to forget to do this analysis

RIS engineer analysis to see what's the

current share price reflex so right now

50% growth is what you're buying but the

DCF model isn't the only way we evaluate

stocks here in stock MVP we have another

tool that's called the Seth we love the

Seth it's the way we evaluate these

stocks based on the five-year model from

the conservative through the middle

ground and through the optimistic

scenario to kind of give you a broader

Spectrum to see where the stock may go

within the parameter of a certain

assumption so we ran these tests based

on 30% growth and 50% growth in revenues

again a 5year consecutive growth of 50

or 30% basically you can see all the

numbers all the assumptions so for a

5year conservative on Nvidia we're

looking at

$1,054 that's a 34% growth for the next

5 years that's not going to be amazing

if you just do 34% of the next 5 years

you're going to underperform the market

it most likely but the middle ground is

where you assume between 30 and 50

that's a $1,400 stock as you saw earlier

and if you go all the way to optimistic

which is a 50% Revenue growth for every

single year for the next 5 years that's

going to bring you to $1,800 which is

134% for the next 5 years not a bad

result all a question of how much

assumptions you want to put on this

company how much expectations you want

to put on this company now this video

took a few minutes not longer than that

because that's how simple it is to do

complex elaborate valuations with stock

MVP now if you haven't yet go get stock

MVP stock mvp.com you can try it out for

a whole week for free congratulations to

people who made good money on Nvidia and

if you haven't yet use this tool to

figure out whether it's still a good

time to invest or not we'll see you in

the next one