Financial market research and analysis

NVidia Corp. is a semi-conductor and graphical computing company based in Santa Clara, California. The company operates through two segments, producing processors for gaming along with big data as well as, a second segment that produces automotive computers, and SHIELD set-top boxes.

Forging New Ground in Gaming

The company has made some significant strides in 2018 in the gaming space. According to reports NVDA announced at the 2018 Game Developers Conference its new the NVida RTX a ray-tracing technology that attempt to bring cinematic quality renderings to game developers. According to reports, gaming designers demonstrated how raytracing can provide life-like capabilities in future games.

Shares sideways since Uber accident

Ahead of earnings the company shares have been moving sideways as short-sellers attempt to push the stock lower.  Nvidia's shares peaked in mid-March and experienced sharp selloff after the company announced that it was halting its self-driving automobile road test out of respect for the victim of an Uber self-driving vehicle that occurred on March 18, 2018.

In early February, market volatility kicked in generating choppy price action for NVDA shares. Despite these conditions, NVDA has outperformed the broader SOX semi-conductor index by 13% during 2018. This can be seen in the chart above which reflects the ratio of NVDA shares over the SOX semi-conductor index. The ratio reflects the relative performance of one asset divided by another.

Cash is King

The company continues to experience significant cash flow from operations. In the fiscal FY of 2018 the company saw $3.50 billion cash flow which was twice the cash flow that NVDA experienced during FY 2017. Cash flow from operations was $1.67 billion in FY17, compared to $1.18 billion in FY16 and $905 million in FY15.

Company Guidance

During its Q4 fiscal earnings report the company provided guidance on revenues of 2.9 billion give or take 2%.  Gross margins are forecast to come in at 62.7%.  The company is expected to receive a substantial benefit from the new tax law expecting their GAAP and non-GAAP tax rate to drop to 12% from 17%. 

Earnings Estimates

Over the past 3-months, the average Q1 forecast has increased by 49%, and over the past 60-days the average forecast has increased 1%. Over the past 90-days, the FY19 consensus estimates have increased by 33% rising to $1.45 per share. The range of 22-analyst estimate is from $1.66 to $0.98 per share. This compares to $0.79 per share for the same quarter last year. The average revenue estimate for the quarter is $2.89 billion, with a range from $2.47 billion to $3.03 billion. This reflects the views of 27-analysts. Revenue a year ago was $1.94 billion, which would put sales growth at 49.30% if NVDA actual revenue meets the median estimate. Growth estimates for the current quarter are 83.5% and for the following quarter are 60.9%.

The robust improvement in estimates ahead of the release means NVDA will likely need to beat on both the top line and bottom line as well as provide positive guidance to have the best chance at pushing the share price to new all-time highs.

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