Stocks pairs trading: NVDA vs JNPR
Let's examine the trade potential for NVIDIA Corporation (NVDA) and Juniper Networks, Inc. (JNPR) by analyzing their key financial metrics and recent performance to determine reasons for going long on NVDA and short on JNPR.
Price-to-Earnings (P/E) Ratio:
NVDA: P/E ratio of 7.16
JNPR: P/E ratio of 51.56
NVDA's significantly lower P/E ratio indicates it is trading at a cheaper valuation relative to its earnings compared to JNPR. This suggests that NVDA is undervalued and has more room for price appreciation.
Earnings Growth:
NVDA: EPS next Y of 32.97%
JNPR: EPS next Y of 16.45%
NVDA’s expected earnings growth for next year is significantly higher than that of JNPR, indicating stronger future performance potential.
Debt and Liquidity:
NVDA: Debt/Eq of 0.23
JNPR: Debt/Eq of 0.39
NVDA has a lower debt-to-equity ratio compared to JNPR, suggesting better financial stability and ability to manage debt.
Profitability Metrics:
NVDA: ROA of 70.10%, ROE of 115.66%
JNPR: ROA of 2.38%, ROE of 5.02%
NVDA's return on assets and return on equity are exceptionally high, indicating efficient use of assets and strong profitability, unlike JNPR.
Performance Metrics:
NVDA: Perf Year of 217.97%, Perf YTD of 147.26%
JNPR: Perf Year of 18.40%, Perf YTD of 20.73%
NVDA's recent performance metrics show explosive growth, while JNPR's performance, though positive, is modest in comparison.
Decision:
Long on 1 NVDA
Short on 4 JNPR
Price-to-Earnings (P/E) Ratio:
NVDA: P/E ratio of 7.16
JNPR: P/E ratio of 51.56
NVDA's significantly lower P/E ratio indicates it is trading at a cheaper valuation relative to its earnings compared to JNPR. This suggests that NVDA is undervalued and has more room for price appreciation.
Earnings Growth:
NVDA: EPS next Y of 32.97%
JNPR: EPS next Y of 16.45%
NVDA’s expected earnings growth for next year is significantly higher than that of JNPR, indicating stronger future performance potential.
Debt and Liquidity:
NVDA: Debt/Eq of 0.23
JNPR: Debt/Eq of 0.39
NVDA has a lower debt-to-equity ratio compared to JNPR, suggesting better financial stability and ability to manage debt.
Profitability Metrics:
NVDA: ROA of 70.10%, ROE of 115.66%
JNPR: ROA of 2.38%, ROE of 5.02%
NVDA's return on assets and return on equity are exceptionally high, indicating efficient use of assets and strong profitability, unlike JNPR.
Performance Metrics:
NVDA: Perf Year of 217.97%, Perf YTD of 147.26%
JNPR: Perf Year of 18.40%, Perf YTD of 20.73%
NVDA's recent performance metrics show explosive growth, while JNPR's performance, though positive, is modest in comparison.
Decision:
Long on 1 NVDA
Short on 4 JNPR
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