Broadcom Inc. (NASDAQ:AVGO) Excels in Caviar Cruise Quality Investing Screen

The Caviar Cruise stock screening method is a structured process for quality investing, centered on finding firms with excellent financial traits and lasting competitive edges. This approach stresses long-term holding of businesses showing steady revenue and profit increases, high returns on capital, acceptable debt, and good cash flow generation. Through strict numerical filters, the screen distinguishes outstanding firms from the wider market, giving investors a beginning for more fundamental study.

Financial Performance Measurements

Broadcom Inc. (NASDAQ:AVGO) shows very good results across the main Caviar Cruise standards. The firm's past growth numbers are much higher than the screening limits, pointing to solid operational management and market standing.

• Revenue Growth (5Y CAGR): 27.33% compared to required 5%
• EBIT Growth (5Y CAGR): 29.07% compared to required 5%
• EBIT Growth higher than Revenue Growth: 29.07% vs 27.33%

The reality that EBIT growth is faster than revenue growth hints at better operational effectiveness and possible pricing strength, both signs of good businesses. This margin improvement shows the firm is reaching scale benefits or has competitive edges that let it turn more revenue into profit at a growing speed.

Profitability and Capital Use

Quality investing favors companies that produce high returns on capital, as this shows management's skill in putting shareholder money into profitable projects. Broadcom's results here are especially strong.

• ROIC (Excluding Cash, Goodwill & Intangibles): 301.66% compared to required 15%
• Profit Quality (5Y Average): 248.47% compared to required 75%

The very high ROIC number means Broadcom creates large profits compared to the capital put into its main activities. The profit quality measurement, which gauges free cash flow generation from net income, is much higher than the screen's limit, indicating the firm's earnings are supported by strong cash creation instead of accounting changes.

Financial Condition and Debt Oversight

Careful financial management is key for quality firms to survive economic declines and keep investing over time. Broadcom's debt situation shows controllable leverage.

• Debt to Free Cash Flow: 2.58 years compared to maximum 5 years

This ratio implies Broadcom could pay back all its debt in under three years using its present free cash flow creation, giving significant financial room. The firm's Altman-Z score of 11.37 further verifies no short-term bankruptcy risks, putting it in a safe spot relative to industry counterparts.

Fundamental Study Summary

Based on the detailed fundamental analysis report, Broadcom gets a total rating of 7 out of 10, with especially high marks in profitability (9/10) and growth (9/10). The report notes exceptional profit margins that do better than over 90% of semiconductor industry peers, with both gross and operating margins getting better in recent periods. While valuation numbers seem high with a P/E ratio of 54.13, this is partly supported by outstanding profitability and predicted earnings growth of 36.83% in future periods. The firm's dividend, although low in yield, shows dependable growth with a 16.17% yearly rise over many years.

Industry Standing and Competitive Edges

Beyond the numerical data, Broadcom has several non-numerical traits that fit quality investing ideas. As a worldwide technology frontrunner in semiconductors and infrastructure software, the firm gains from several competitive edges including wide intellectual property holdings, long-lasting client partnerships in critical applications, and high entry barriers in its specialized sectors. The firm's varied product range across semiconductor answers and enterprise software offers revenue variety while keeping technological connections.

For investors curious about finding other firms satisfying the Caviar Cruise standards, the full screening outcomes are ready for more investigation.

Disclaimer: This study is based on publicly available information and is given for educational reasons only. It does not form investment guidance, nor does it show a suggestion to buy, sell, or hold any security. Investors should do their own research and talk with a qualified financial consultant before making investment choices.