NVIDIA Corp. (NASDAQ:NVDA)

The valuation ratios demonstrate considerable fluctuation over the five-year period. Generally, the observed values decreased from 2023 to 2026, although the initial years exhibited their own distinct patterns. A review of individual ratios reveals specific trends and relationships.

Price to Earnings (P/E)

The Price to Earnings ratio peaked in 2023 at 131.70 before declining consistently through 2026, reaching 39.58. This suggests a decreasing investor willingness to pay for each dollar of earnings over time, or potentially, expectations of slower earnings growth. The ratio began at 78.54 in 2021 and decreased to 68.08 in 2022 before the significant increase in 2023.

Price to Operating Profit (P/OP)

The Price to Operating Profit ratio mirrored the trend of the P/E ratio, reaching a high of 136.19 in 2023 and subsequently decreasing to 36.45 by 2026. This indicates a similar shift in investor sentiment regarding the company’s operational profitability. The ratio followed a similar pattern to P/E, starting at 75.08 in 2021 and decreasing to 66.12 in 2022.

Price to Sales (P/S)

The Price to Sales ratio exhibited more variability. It increased from 20.41 in 2021 to 24.67 in 2022, decreased to 21.33 in 2023, and then rose again to 27.69 in 2024. A subsequent decline to 22.01 was observed by 2026. This suggests that revenue growth, while important, may not have been consistently driving valuation. The ratio’s fluctuations were less pronounced than those of the earnings-based multiples.

Price to Book Value (P/BV)

The Price to Book Value ratio showed a consistent increase from 20.14 in 2021 to 26.03 in 2023, followed by a peak of 40.38 in 2025 before decreasing to 30.21 in 2026. This indicates a changing perception of the company’s net asset value relative to its market price. The increase suggests investors placed a higher premium on the company’s assets, while the later decrease suggests a potential reassessment of that premium.

Overall, the period from 2023 to 2026 appears to be characterized by a cooling of valuation multiples across all ratios examined. The earlier years, 2021 and 2022, showed different trends, with some ratios increasing and others decreasing, indicating a more complex valuation landscape at that time. The consistent decline in P/E and P/OP from 2023 suggests a potential shift in investor expectations regarding future profitability.

The price to earnings (P/E) ratio exhibited considerable fluctuation over the observed period. Initially, the P/E ratio stood at 78.54, decreased to 68.08, then increased substantially to 131.70 before declining again to 56.68. This pattern suggests a dynamic valuation influenced by changes in both share price and earnings per share.

Overall Trend

From 2021 to 2023, the P/E ratio initially decreased, then experienced a significant increase. Following 2023, a consistent downward trend in the P/E ratio is observed, moving from 56.68 to 39.58 by 2026. This suggests a potential stabilization or increasing investor confidence relative to earnings growth.

Share Price Influence

The share price demonstrated a generally increasing trend throughout the period, with notable jumps between 2023 and 2024, and 2024 and 2025. However, the P/E ratio did not consistently rise with the share price, indicating that earnings growth did not always keep pace with price appreciation.

Earnings Per Share (EPS) Influence

Earnings per share experienced volatility. A decrease in EPS was observed between 2022 and 2023. Subsequently, EPS increased significantly, contributing to the decline in the P/E ratio from 2023 to 2026. The increasing EPS suggests improving profitability, which may be moderating the valuation as reflected in the P/E ratio.

P/E Ratio Extremes

The highest P/E ratio was recorded in 2023 at 131.70, potentially indicating overvaluation or high growth expectations at that time. The lowest P/E ratio was observed in 2021 at 78.54. The decreasing P/E ratio in the later years suggests a potential correction or a more reasonable valuation relative to earnings.

The interplay between share price and earnings per share has resulted in a complex P/E ratio trajectory. The recent decline in the P/E ratio, coupled with increasing earnings per share, may signal a more sustainable valuation.

The price to operating profit (P/OP) ratio exhibited considerable fluctuation over the observed period. Initially, the ratio decreased from 75.08 in 2021 to 66.12 in 2022, before increasing substantially to 136.19 in 2023. Subsequently, a marked decline was observed, with the ratio falling to 51.16 in 2024, and continuing to decrease to 39.33 in 2025. This downward trend persisted into 2026, with the P/OP ratio reaching 36.45.

Share Price Trend

The share price demonstrated a generally increasing trajectory throughout the period. From a value of 13.72 in 2021, it rose to 26.45 in 2022, experienced a slight dip to 23.29 in 2023, and then surged to 67.47 in 2024. Continued growth was evident in 2025, reaching 131.28, and further increasing to 195.56 in 2026.

Operating Profit per Share Trend

Operating profit per share showed an initial increase from 0.18 in 2021 to 0.40 in 2022, followed by a decrease to 0.17 in 2023. A significant increase was then recorded, rising to 1.32 in 2024, 3.34 in 2025, and 5.37 in 2026. This indicates a substantial improvement in profitability over the latter part of the period.

Relationship between P/OP, Share Price, and Operating Profit

The initial decrease in the P/OP ratio from 2021 to 2022 coincided with an increase in share price and operating profit per share, suggesting that earnings growth was keeping pace with, or slightly outpacing, investor expectations. The subsequent spike in the P/OP ratio in 2023, despite a decrease in share price, was driven by a more substantial decline in operating profit per share. The subsequent decline in the P/OP ratio from 2023 to 2026 occurred alongside increases in both share price and operating profit per share, indicating that the market’s valuation of each dollar of operating profit decreased over time. This could be due to changing investor sentiment, broader market conditions, or evolving expectations regarding future growth.

In summary, while the share price and operating profit per share generally trended upwards, the P/OP ratio experienced significant volatility, ultimately decreasing from its peak in 2023. This suggests a changing relationship between the company’s market valuation and its operating profitability.

The price-to-sales ratio exhibited a fluctuating pattern over the observed period. Initially, the ratio increased from 20.41 in January 2021 to 24.67 in January 2022, indicating investors were willing to pay more for each dollar of sales. A subsequent decrease to 21.33 was noted in January 2023, before a substantial rise to 27.69 in January 2024. The ratio then decreased to 24.55 in January 2025 and continued to decline to 22.01 in January 2026.

Price-to-Sales Ratio Trend

The price-to-sales ratio demonstrated volatility throughout the period. The peak value of 27.69 in January 2024 suggests a period of heightened investor optimism or potentially overvaluation relative to sales. The subsequent decline in the ratio from January 2024 to January 2026 indicates a cooling of investor sentiment or a convergence towards a more sustainable valuation level.

Concurrent with the price-to-sales ratio fluctuations, sales per share experienced a consistent upward trend. Sales per share increased from 0.67 in January 2021 to 8.89 in January 2026. This growth in sales per share partially offsets the fluctuations in the price-to-sales ratio, suggesting that the changes in the ratio are not solely driven by changes in the share price but also by the company’s revenue generation.

Share Price and Sales Per Share Relationship

The share price increased significantly over the period, rising from 13.72 in January 2021 to 195.56 in January 2026. This increase, coupled with the growth in sales per share, contributed to the observed fluctuations in the price-to-sales ratio. The ratio’s movements reflect the interplay between investor expectations regarding future growth and the actual realization of sales.

The decreasing price-to-sales ratio in the latter part of the period, despite continued growth in sales per share, could indicate that the market’s growth expectations are moderating or that the share price is becoming more grounded in the company’s fundamental performance.

Recent Ratio Decline

The decline in the price-to-sales ratio from January 2024 to January 2026, while sales per share continued to increase, warrants further investigation. This trend could signal a shift in market perception, potentially reflecting concerns about future growth rates or increased competition. It is also possible that the initial high valuation in January 2024 was unsustainable and is now correcting.

The price-to-book value ratio exhibits a generally increasing trend over the observed period, although with fluctuations. Initial values indicate a relatively high valuation, which subsequently increased significantly before moderating in the later years.

Overall Trend

From January 31, 2021, to January 28, 2024, the P/BV ratio demonstrates a clear upward trajectory, rising from 20.14 to 39.25. This suggests an increasing premium investors were willing to pay for each dollar of net asset value. However, the ratio then decreased to 30.21 by January 26, 2026, indicating a potential shift in market sentiment or a recalibration of valuation expectations.

Initial Period (2021-2022)

Between January 31, 2021, and January 30, 2022, the P/BV ratio increased from 20.14 to 24.95. This represents a moderate increase, suggesting a gradual increase in investor confidence or expectations regarding the company’s ability to generate returns from its assets.

Rapid Growth (2022-2024)

The period from January 30, 2022, to January 28, 2024, witnessed a more substantial increase in the P/BV ratio, climbing to 39.25. This accelerated growth could be attributed to factors such as strong earnings performance, positive industry developments, or increased market speculation.

Recent Moderation (2024-2026)

From January 28, 2024, to January 26, 2026, the P/BV ratio decreased from 39.25 to 30.21. This decline may indicate a correction in the market, a change in investor perception of future growth prospects, or a relative increase in the book value per share. The ratio remains elevated compared to earlier periods, however.

Book Value Per Share

The book value per share also generally increased over the period, moving from US$0.68 in January 31, 2021, to US$6.47 in January 26, 2026. This increase in book value likely contributed to the moderation of the P/BV ratio in the later years, as the denominator of the ratio grew.

In summary, the P/BV ratio experienced significant growth followed by a recent decline, while the underlying book value per share consistently increased. These trends suggest a dynamic valuation influenced by both market sentiment and fundamental changes in the company’s net asset value.