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Nova Ltd. (NVMI)
:NVMI
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Nova
(NASDAQ:NVMI)
73Outperform
Positive Factors
Financial Performance
Nova has outperformed WFE spending by a factor of 2X since 2020, driven by a 34% earnings CAGR and an 8% rise in operating margins.
Market Position
Nova is the leader in integrated metrology and second in Optical CD, with sales from AI/HBM customers projected to grow to 20% of total by 2027.
Product Expansion
The recent acquisition of Sentronics expands Nova’s offerings in dimensional metrology and broadens its offerings beyond 300 mm wafers, adding $100 M to $200 M to Nova’s TAM.
Negative Factors
Geopolitical Concerns
Management sounded visibly more cautious on the China outlook and second half of 2025 visibility.
Market Uncertainty
The quarter also saw record revenue for Materials Metrology and advanced packaging and a sequential growth in Dimensional Metrology.
Regional Performance
NVMI, being one of the very few semicap companies not seeing the China weakness, continues to raise our concerns.
Nova (NVMI) vs. S&P 500 (SPY)
Market Cap
$5.46B
Dividend YieldN/A
Average Volume (3M)318.85K
Price to Earnings (P/E)32.6
Beta (1Y)1.92
Revenue Growth29.83%
EPS Growth33.42%
CountryUS
Employees1,177
SectorTechnology
Sector Strength44
IndustrySemiconductors
Share Statistics
EPS (TTM)5.71
Shares Outstanding29,278,400
10 Day Avg. Volume292,059
30 Day Avg. Volume318,851
Financial Highlights & Ratios
PEG Ratio0.98
Price to Book (P/B)N/A
Price to Sales (P/S)42.98
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$297.00Price Target Upside59.31% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Nova Business Overview & Revenue Model
Company DescriptionNova Ltd. (NVMI) is a leading provider of metrology solutions for the semiconductor manufacturing industry. The company develops, manufactures, and markets advanced process control systems used in the fabrication of integrated circuits. Nova's innovative technologies enable semiconductor manufacturers to improve their production yields, reduce costs, and enhance the performance of their products.
How the Company Makes MoneyNova Ltd. generates revenue primarily through the sale of its metrology systems and related software products to semiconductor manufacturers. Key revenue streams include the direct sale of hardware and software, as well as service contracts for ongoing maintenance and support. The company's earnings are significantly influenced by the cyclicality of the semiconductor industry, technological advancements, and capital expenditure trends of its clients. Nova collaborates with leading semiconductor companies and foundries, which helps in optimizing its product offerings and expanding its market reach.
Nova Financial Statement Overview
Summary
Nova demonstrates strong financial performance with impressive revenue growth, high profitability margins, solid balance sheet, and robust cash flow management. The company is well-positioned in the semiconductor industry, reflecting resilience and effective financial management.Income Statement
Nova has demonstrated impressive revenue growth, with a 29.8% increase from 2023 to 2024. The gross profit margin of 57.6% and net profit margin of 27.3% reflect strong profitability. Consistent EBIT and EBITDA margins of 27.9% and 34.7% respectively indicate operational efficiency. These metrics highlight Nova's robust growth and profitability in the highly competitive semiconductor industry.92
Very Positive
Balance Sheet
The company maintains a solid balance sheet with a debt-to-equity ratio of 0.25, showcasing a conservative approach to leveraging. A return on equity of 19.8% indicates effective use of equity capital to generate profits. The equity ratio of 66.7% suggests substantial financial stability. Overall, Nova's balance sheet reflects strong financial health with low debt and high shareholder equity.85
Very Positive
Cash Flow
Nova's free cash flow grew by 105.1% in 2024, evidencing strong cash generation capabilities. The operating cash flow to net income ratio of 1.28 demonstrates effective cash conversion from earnings. Furthermore, the free cash flow to net income ratio of 1.19 indicates robust free cash flow relative to profits, which supports reinvestment and shareholder returns. These metrics show Nova's strong cash flow management.89
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 672.40M | 517.92M | 570.73M | 416.11M | 269.40M | Gross Profit |
| 387.09M | 293.18M | 322.40M | 237.36M | 152.92M | EBIT |
| 187.54M | 132.26M | 149.93M | 112.39M | 55.57M | EBITDA |
| 233.67M | 172.41M | 164.59M | 121.32M | 63.95M | Net Income Common Stockholders |
| 183.76M | 136.31M | 140.21M | 93.10M | 47.91M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 586.57M | 443.68M | 373.50M | 410.16M | 423.87M | Total Assets |
| 1.39B | 1.13B | 984.11M | 805.15M | 655.79M | Total Debt |
| 236.10M | 244.14M | 246.06M | 220.94M | 214.42M | Net Debt |
| 78.32M | 136.57M | 134.94M | 94.24M | -17.89M | Total Liabilities |
| 462.63M | 383.06M | 397.14M | 331.40M | 284.25M | Stockholders Equity |
| 927.79M | 750.75M | 586.96M | 473.75M | 371.54M |
| Cash Flow | Free Cash Flow | |||
| 218.05M | 106.34M | 98.22M | 127.45M | 53.81M | Operating Cash Flow |
| 235.27M | 123.53M | 119.54M | 132.26M | 60.25M | Investing Cash Flow |
| -136.40M | -125.33M | -100.26M | -238.50M | -42.46M | Financing Cash Flow |
| -48.35M | 10.00K | -29.81M | 11.00K | 181.41M |
Nova Technical Analysis
Negative
186.43
Price Trends
234.33
Negative
214.54
Negative
213.29
Negative
Market Momentum
-11.99
Positive
32.47
Neutral
13.85
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NVMI, the sentiment is Negative. The current price of 186.43 is below the 20-day moving average (MA) of 209.36, below the 50-day MA of 234.33, and below the 200-day MA of 213.29, indicating a bearish trend. The MACD of -11.99 indicates Positive momentum. The RSI at 32.47 is Neutral, neither overbought nor oversold. The STOCH value of 13.85 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NVMI.
Nova Risk Analysis
Nova disclosed 51 risk factors in its most recent earnings report. Nova reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Nova Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $93.21B | 22.06 | 50.42% | 1.18% | 13.21% | 27.25% | |
77 Outperform | $89.51B | 28.33 | 96.81% | 0.94% | 12.19% | 20.80% | |
76 Outperform | $117.85B | 18.98 | 35.19% | 1.10% | 4.45% | -10.01% | |
76 Outperform | $264.00B | 32.39 | 48.13% | 0.85% | 2.53% | -3.33% | |
73 Outperform | $5.46B | 32.64 | 21.90% | ― | 29.83% | 33.42% | |
70 Outperform | $6.01B | 30.06 | 11.01% | ― | 21.01% | 65.27% | |
58 Neutral | $21.03B | 10.58 | -16.29% | 2.47% | 4.38% | -23.63% |
* Technology Sector Average
Performance Comparison
NVMI
Nova
186.43
8.33
4.68%
AMAT
Applied Materials
145.06
-61.89
-29.91%
ASML
ASML Holding
674.58
-311.32
-31.58%
KLAC
KLA
673.60
-30.99
-4.40%
LRCX
Lam Research
72.61
-24.50
-25.23%
ONTO
Onto Innovation
122.07
-63.23
-34.12%
Nova Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -24.04% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
Nova experienced a strong fiscal year with record revenue and profitability, driven by significant growth in advanced packaging and a successful Sentronics acquisition. However, there are potential challenges related to high revenue exposure to China and increased operating expenses.Highlights
Record Revenue and Profitability
Nova reported record revenue of $672.4 million for fiscal year 2024, representing a 30% year-over-year growth. Non-GAAP net income grew by 38%.
Quarterly Performance
Fourth quarter revenue reached a record high of $194.8 million, a 9% increase quarter-over-quarter and 45% growth year-over-year.
Advanced Packaging Growth
Advanced packaging revenue more than doubled, reaching 15% of product revenue. Integrated metrology solutions were adopted by four of the top five advanced packaging manufacturers.
Strong Financial Metrics
Operating margin reached 28% on a GAAP basis and 33% on a non-GAAP basis. Earnings per share on a non-GAAP basis were $1.94, exceeding guidance.
Sentronics Acquisition
Completed the acquisition of Sentronics Metrology, expected to be accretive within 12 months. The acquisition aligns with strategic growth priorities.
Lowlights
China Revenue Exposure
39% of Nova's revenue in 2024 came from China, which may decline as growth will come from advanced nodes outside China.
Operating Expenses Increase
Operating expenses increased to $54.5 million on a GAAP basis, attributed to expanding R&D efforts.
Company Guidance
In the recent earnings call, Nova Limited provided an optimistic outlook for 2025, following a record-breaking fiscal year 2024. The company reported a 30% year-over-year revenue growth, reaching $672.4 million, and a 38% increase in non-GAAP net income. In the fourth quarter alone, Nova achieved $194.8 million in revenue, marking a 45% year-over-year increase, with gross margins of 56% (GAAP) and 58% (non-GAAP). The company's advanced packaging revenue more than doubled, contributing 15% to product revenue, and was bolstered by a significant market share gain in stand-alone OCD solutions. For Q1 2025, Nova expects revenue between $205 million and $215 million, with GAAP EPS ranging from $1.75 to $1.91. The company continues to focus on expanding its footprint in advanced logic and packaging markets, underscored by its recent acquisition of Sentronics, which is expected to be accretive on a non-GAAP basis within a year. Nova anticipates outperforming the mid-single-digit growth forecasted for the WFE market, driven by strategic market positioning and increased demand from AI-related applications.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.