BROADCOM INC (AVGO)
US11135F1012 - Common Stock
Taking everything into account, AVGO scores 6 out of 10 in our fundamental rating. AVGO was compared to 107 industry peers in the Semiconductors & Semiconductor Equipment industry. While AVGO has a great profitability rating, there are some minor concerns on its financial health. AVGO is not priced too expensively while it is growing strongly. Keep and eye on this one!
1. Profitability
1.1 Basic Checks
AVGO had positive earnings in the past year.
In the past year AVGO had a positive cash flow from operations.
AVGO had positive earnings in each of the past 5 years.
AVGO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
AVGO has a better Return On Assets (6.54%) than 66.04% of its industry peers.
AVGO has a better Return On Equity (16.55%) than 77.36% of its industry peers.
AVGO has a Return On Invested Capital of 7.59%. This is in the better half of the industry: AVGO outperforms 68.87% of its industry peers.
AVGO had an Average Return On Invested Capital over the past 3 years of 15.60%. This is significantly above the industry average of 10.53%.
The last Return On Invested Capital (7.59%) for AVGO is well below the 3 year average (15.60%), which needs to be investigated, but indicates that AVGO had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.54% | ||
| ROE | 16.55% | ||
| ROIC | 7.59% |
ROA(3y)14.39%
ROA(5y)10.13%
ROE(3y)44.64%
ROE(5y)31.17%
ROIC(3y)15.6%
ROIC(5y)11.44%
1.3 Margins
AVGO has a Profit Margin of 29.93%. This is amongst the best in the industry. AVGO outperforms 92.45% of its industry peers.
AVGO's Profit Margin has declined in the last couple of years.
AVGO has a better Operating Margin (38.94%) than 96.23% of its industry peers.
AVGO's Operating Margin has improved in the last couple of years.
AVGO has a better Gross Margin (67.30%) than 88.68% of its industry peers.
In the last couple of years the Gross Margin of AVGO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 38.94% | ||
| PM (TTM) | 29.93% | ||
| GM | 67.3% |
OM growth 3Y36.06%
OM growth 5Y12.19%
PM growth 3Y52.21%
PM growth 5Y-7.74%
GM growth 3Y6.72%
GM growth 5Y5.97%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so AVGO is still creating some value.
AVGO has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, AVGO has more shares outstanding
AVGO has about the same debt/assets ratio as last year.
2.2 Solvency
An Altman-Z score of 3.91 indicates that AVGO is not in any danger for bankruptcy at the moment.
AVGO has a Altman-Z score (3.91) which is comparable to the rest of the industry.
The Debt to FCF ratio of AVGO is 4.13, which is a neutral value as it means it would take AVGO, 4.13 years of fcf income to pay off all of its debts.
AVGO has a Debt to FCF ratio (4.13) which is in line with its industry peers.
AVGO has a Debt/Equity ratio of 1.05. This is a high value indicating a heavy dependency on external financing.
AVGO has a Debt to Equity ratio of 1.05. This is amonst the worse of the industry: AVGO underperforms 80.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.05 | ||
| Debt/FCF | 4.13 | ||
| Altman-Z | 3.91 |
ROIC/WACC0.62
WACC12.34%
2.3 Liquidity
A Current Ratio of 1.33 indicates that AVGO should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.33, AVGO is doing worse than 83.96% of the companies in the same industry.
AVGO has a Quick Ratio of 1.24. This is a normal value and indicates that AVGO is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of AVGO (1.24) is worse than 76.42% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.33 | ||
| Quick Ratio | 1.24 |
3. Growth
3.1 Past
AVGO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.41%, which is quite good.
AVGO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.19% yearly.
AVGO shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.94%.
AVGO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 11.43% yearly.
EPS 1Y (TTM)8.41%
EPS 3Y24.04%
EPS 5Y15.19%
EPS growth Q2Q6.39%
Revenue 1Y (TTM)12.94%
Revenue growth 3Y14.46%
Revenue growth 5Y11.43%
Revenue growth Q2Q34.17%
3.2 Future
Based on estimates for the next years, AVGO will show a quite strong growth in Earnings Per Share. The EPS will grow by 18.84% on average per year.
The Revenue is expected to grow by 18.03% on average over the next years. This is quite good.
EPS Next Y13.26%
EPS Next 2Y17.26%
EPS Next 3Y14.42%
EPS Next 5Y18.84%
Revenue Next Year38.88%
Revenue Next 2Y25.59%
Revenue Next 3Y19.88%
Revenue Next 5Y18.03%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 30.89, which means the current valuation is very expensive for AVGO.
63.21% of the companies in the same industry are more expensive than AVGO, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of AVGO to the average of the S&P500 Index (28.05), we can say AVGO is valued inline with the index average.
With a Price/Forward Earnings ratio of 22.82, AVGO is valued on the expensive side.
Based on the Price/Forward Earnings ratio, AVGO is valued a bit cheaper than the industry average as 70.75% of the companies are valued more expensively.
AVGO is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 20.30, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.89 | ||
| Fwd PE | 22.82 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as AVGO.
Based on the Price/Free Cash Flow ratio, AVGO is valued a bit cheaper than the industry average as 74.53% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.39 | ||
| EV/EBITDA | 32.93 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
AVGO has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as AVGO's earnings are expected to grow with 14.42% in the coming years.
PEG (NY)2.33
PEG (5Y)2.03
EPS Next 2Y17.26%
EPS Next 3Y14.42%
5. Dividend
5.1 Amount
AVGO has a Yearly Dividend Yield of 1.70%.
Compared to an average industry Dividend Yield of 2.04, AVGO pays a better dividend. On top of this AVGO pays more dividend than 88.68% of the companies listed in the same industry.
Compared to the average S&P500 Dividend Yield of 2.40, AVGO is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.7% |
5.2 History
The dividend of AVGO is nicely growing with an annual growth rate of 20.15%!
AVGO has been paying a dividend for at least 10 years, so it has a reliable track record.
AVGO has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)20.15%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
70.09% of the earnings are spent on dividend by AVGO. This is not a sustainable payout ratio.
The dividend of AVGO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP70.09%
EPS Next 2Y17.26%
EPS Next 3Y14.42%
BROADCOM INC
NASDAQ:AVGO (5/8/2024, 7:00:00 PM)
After market: 1318.5 -6.87 (-0.52%)1325.37
+22.26 (+1.71%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap614.20B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.7% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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EPS beat(8)
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EPS beat(16)
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Revenue beat(2)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.89 | ||
| Fwd PE | 22.82 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)2.33
PEG (5Y)2.03
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.54% | ||
| ROE | 16.55% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 38.94% | ||
| PM (TTM) | 29.93% | ||
| GM | 67.3% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.22
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.05 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.33 | ||
| Quick Ratio | 1.24 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)8.41%
EPS 3Y24.04%
EPS 5Y
EPS growth Q2Q
EPS Next Y13.26%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)12.94%
Revenue growth 3Y14.46%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y