Fundamental analysis is more than just a foundation—it’s the key to understanding a company’s true value potential. While many investors stop at basic metrics like Earnings Per Share and Revenue, the real magic happens when you dive deeper into the financial statements. With Fundamental Formulas, you can go beyond the surface and create custom metrics that reveal a company’s true stability, efficiency, and long-term viability. Let’s dig in.
Fundamental Formulas bring the power of spreadsheet calculations directly to your charting experience, enabling you to define and visualize the key fundamental data points that matter most to your analysis.
Creating A Formula
All formulas consist of three key components; Metric IDs, mathematical expressions, and advanced functions. You can utilize any fundamental value found in the platform in your formula. An exhaustive list of all available fundamental metrics can be found here.
Formula: =(revenue + revenue[1] + revenue[2] + revenue[3])
1. Metric ID defines the fundamental data point within a formula. Below are some example metric IDs and a full list of IDs are available here.
- Dividends Per Share: ‘dividends_per_share’ or ‘dps’
- Earnings Per Share: ‘eps’ or ‘eps_basic’
- Market Cap: ‘market_cap’ or ‘mcap’
- Price To Earnings Ratio (Quarterly): ‘pe_ratio_quarterly’ or ‘pe_q’
- Price To Book Value: ‘price_to_book_value’ or ‘pb’
2. Mathematical Expressions allow you to utilize common operators like +, -, *, /, and () to construct your formula. For example:
- YoY Revenue Growth: = (revenue – revenue[4]) / revenue[4]
- Revenue Per Share: = (revenue / shares_basic_bs)
3. Advanced Functions allow you to define specific past values, perform basic arithmetic, and find patterns or trends in the data.
- Metric [x]: Refers to a single historical value of the metric.
- sum(metric, length): Returns a sum of the last ‘x’ values of the metric.
- ma(metric, length) or avg(metric, length): Returns a moving average of last ‘x’ values of the metric.
- Full list of advanced functions.
Putting Custom Fundamental Metrics To Work on NVDA
These custom formulas allow you to tailor fundamental metrics to your unique strategy. Using NVDA as our case study, let’s dig into a few examples.
Annual EPS
The annual EPS value is a straightforward measure of a company’s profitability on a per-share basis over a trailing twelve-month (TTM) period. The below formula can be used to calculate annual EPS, with the numbers in the brackets denoting the quarters referenced in the calculation.
Formula: =(eps + eps[1] + eps[2] + eps[3])
Over the past year, NVDA has experienced a surge in its annual EPS, which has soared from just $0.19/share in Q1 of 2023 to $1.73 per share now—a 791.5% increase year-over-year. This remarkable growth has been fueled by insatiable demand for NVDA‘s chips from tech heavyweights like AAPL, TSLA, and MSFT.
Annual EPS and Revenue Growth Rates
By visualizing how quickly or slowly the annual EPS and revenue growth rates are increasing or decreasing, we can gain valuable insight into how well a company is expanding its business operations and attracting more sales over time.
- Annual EPS Growth Rate Formula: =(eps + eps[1] + eps[2] + eps[3] – eps[4] – eps[5] – eps[6] – eps[7]) / (eps[4] + eps[5] + eps[6] + eps[7]) * 100
- Annual Revenue Growth Rate Formula: =(revenue + revenue[1] + revenue[2] + revenue[3] – revenue[4] – revenue[5] – revenue[6] – revenue[7]) / (revenue[4] + revenue[5] + revenue[6] + revenue[7]) * 100
- For directions on how to utilize these formulas in the platform, please scroll to the bottom of this article.
With dramatic increases in absolute EPS and revenue numbers come powerful shifts in growth rates. Over the past year, NVDA‘s EPS growth has skyrocketed to 791.50%. This change represents a 1,720% increase year over year. Additionally, NVDA‘s revenue growth has accelerated by 208.27%, from $25.87b in the previous year to $79.77b. This revenue expansion is being driven, in large part, by data centers’ increasing adoption of their GPUs for AI workloads.
Free Cash Flow Dividend Payout Ratio
The Free Cash Flow Dividend Payout Ratio indicates whether a company has ample cash levels to cover its dividend payments. High ratios signal potential risks, as the company could struggle to maintain its dividend payments if cash flow decreases, while low levels suggest a company’s ability to potentially raise its dividend over time.
Formula: =(-(dividends_paid + dividends_paid[1] + dividends_paid[2] + dividends_paid[3])) / (fcf + fcf[1] + fcf[2] + fcf[3])
For directions on how to utilize this formula in the platform, please scroll to the bottom of this article.
In the semiconductor sector, a free cash flow dividend payout ratio below 50% is generally considered safe and sustainable. Compared to its peers, NVDA‘s ratio of just 0.01 is strikingly low. For context, AVGO has a ratio of 0.47, meaning it pays out nearly half of its FCF to shareholders. NVDA‘s low ratio suggests that the company may be intentionally retaining a substantial portion of its cash right now to fund future growth initiatives, share buybacks, or dividend increases.
Debt To Equity Ratio (Total)
The total debt-to-equity ratio provides a broad view of a company’s financial leverage. A high ratio indicates that a company is heavily financed by debt relative to equity, which can increase financial risk. A lower ratio can suggest a more conservative capital structure, or simply that a company is operationally profitable enough to not need to borrow.
Formula: =(total_debt) / (total_equity)
As we continue to assess NVDA‘s financial health, it’s important to consider its total debt-to-equity ratio, which has been steadily decreasing since October 2022 and is currently at a relatively low level of 0.229. For comparison, SMCI‘s recent 800% increase in YoY total debt has pushed its d/e ratio to 0.367, while AMD currently has the lowest ratio within the semiconductor sector, at .04.
Debt to Equity Ratio (Long Term)
The long-term debt-to-equity ratio shows how much of a company’s operations and growth are being financed by debt versus its own funds. A high long-term D/E ratio can be concerning if a company doesn’t generate enough steady cash flow to service that debt over time.
Formula: =(long_term_debt) / (total_equity)
NVDA‘s long-term debt-to-equity ratio of 0.199 is well within the industry standard range between 0.1 and 0.4. This can be attributed to a 100% YoY increase in total equity in tandem with a long-term debt balance that has remained relatively flat over the same period.
Quick Ratio
The quick ratio is a financial metric used to evaluate a company’s short-term liquidity. It measures the company’s ability to meet its short-term obligations using its most liquid assets. The quick ratio excludes inventory from current assets, as inventory is not as easily converted to cash.
Formula: =(total_current_assets – inventories) / (total_current_liabilities)
NVDA’s quick ratio has increased by 12.6% YoY to a current value of 3.144. This indicates that the company has $3.14 in liquid assets for every $1 of short-term liabilities, highlighting its strong liquidity position. This high ratio, significantly above its peers, provides NVDA with greater flexibility to meet short-term obligations, invest strategically, buy down debt, or increase dividends.
Conclusion
In conclusion, by analyzing NVDA‘s key financial metrics, we gain a comprehensive understanding of the company’s financial health and strategic positioning. Relative to its peers, it is truly in a league of its own.
| Name | Annual EPS | Annual EPS Growth | Annual Rev. Growth | FCF DPR | D/E (Total) | D/E (Long-term) | Quick Ratio |
|---|---|---|---|---|---|---|---|
| NVDA | $1.73 | 791.49% | 208.16% | 0.01 | 0.229 | 0.199 | 3.14 |
| AVGO | $2.39 | -27% | 21.62% | 0.47 | 1.06 | 1.02 | 1.16 |
| AMD | $0.83 | -5,400% | 6.40% | n/a | 0.04 | 0.04 | 2.01 |
| ON | $4.50 | -0.34% | -6.62% | n/a | 0.40 | 0.305 | 1.95 |
| SMCI | $19.15 | 71.59% | 79.79% | n/a | 0.367 | 0.353 | 2.29 |
Its impressive EPS and revenue growth highlight its ability to capitalize on the booming demand for AI technologies, while its low long-term debt-to-equity ratio and high quick ratio provide the company with both stability and flexibility.
Additionally, NVDA’s low free cash flow dividend payout ratio suggests that the company has plenty of cash to fund future growth, whether through scaling, acquisitions, or dividend increases. Together, these metrics paint a picture of a company that is not only growing rapidly but also managing its financial resources with an eye toward long-term sustainability and resilience.
As always, we hope you find this update helpful to your analysis. If you have any questions, feel free to reach out to our support team via the ‘Contact Us’ button in the bottom right corner of your platform view.
Additionally, please be advised that when copying and pasting the Annual EPS, Annual Revenue, and Free Cash Flow Dividend Ratios from this blog into the platform, minus symbols are converted to dashes, causing the formulas to break. This is a known issue that’s being worked on, but for now, in order for these formulas to work you must edit the dashes and replace them with minus symbols manually. We apologize for the inconvenience.
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