BROADCOM INC (AVGO) Stock Fundamental Analysis
NASDAQ:AVGO - Nasdaq - US11135F1012 - Common Stock - Currency: USD
AVGO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 110 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 shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
In the past year AVGO was profitable.
AVGO had a positive operating cash flow in the past year.
Each year in the past 5 years AVGO has been profitable.
Each year in the past 5 years AVGO had a positive operating cash flow.
1.2 Ratios
AVGO's Return On Assets of 6.09% is fine compared to the rest of the industry. AVGO outperforms 70.00% of its industry peers.
With a decent Return On Equity value of 14.43%, AVGO is doing good in the industry, outperforming 77.27% of the companies in the same industry.
AVGO's Return On Invested Capital of 9.90% is amongst the best of the industry. AVGO outperforms 80.91% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AVGO is above the industry average of 11.17%.
The 3 year average ROIC (14.76%) for AVGO is well above the current ROIC(9.90%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.09% | ||
| ROE | 14.43% | ||
| ROIC | 9.9% |
ROA(3y)12.74%
ROA(5y)10.05%
ROE(3y)38.95%
ROE(5y)30.76%
ROIC(3y)14.76%
ROIC(5y)11.78%
1.3 Margins
AVGO has a better Profit Margin (18.47%) than 79.09% of its industry peers.
AVGO's Profit Margin has been stable in the last couple of years.
AVGO's Operating Margin of 34.66% is amongst the best of the industry. AVGO outperforms 94.55% of its industry peers.
AVGO's Operating Margin has improved in the last couple of years.
AVGO's Gross Margin of 65.02% is amongst the best of the industry. AVGO outperforms 90.91% of its industry peers.
In the last couple of years the Gross Margin of AVGO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 34.66% | ||
| PM (TTM) | 18.47% | ||
| GM | 65.02% |
OM growth 3Y-2.23%
OM growth 5Y9.44%
PM growth 3Y-21.3%
PM growth 5Y-0.85%
GM growth 3Y1.13%
GM growth 5Y2.71%
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 more shares outstanding than it did 1 year ago.
The number of shares outstanding for AVGO has been increased compared to 5 years ago.
Compared to 1 year ago, AVGO has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 7.51 indicates that AVGO is not in any danger for bankruptcy at the moment.
AVGO has a better Altman-Z score (7.51) than 71.82% of its industry peers.
The Debt to FCF ratio of AVGO is 3.21, which is a good value as it means it would take AVGO, 3.21 years of fcf income to pay off all of its debts.
AVGO has a Debt to FCF ratio of 3.21. This is in the better half of the industry: AVGO outperforms 60.91% of its industry peers.
AVGO has a Debt/Equity ratio of 0.93. This is a neutral value indicating AVGO is somewhat dependend on debt financing.
AVGO's Debt to Equity ratio of 0.93 is on the low side compared to the rest of the industry. AVGO is outperformed by 83.64% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.93 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 7.51 |
ROIC/WACC0.86
WACC11.47%
2.3 Liquidity
AVGO has a Current Ratio of 1.00. This is a normal value and indicates that AVGO is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.00, AVGO is not doing good in the industry: 94.55% of the companies in the same industry are doing better.
A Quick Ratio of 0.91 indicates that AVGO may have some problems paying its short term obligations.
AVGO has a worse Quick ratio (0.91) than 90.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1 | ||
| Quick Ratio | 0.91 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 24.82% over the past year.
AVGO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 17.90% yearly.
The Revenue has grown by 40.30% in the past year. This is a very strong growth!
The Revenue has been growing by 17.94% on average over the past years. This is quite good.
EPS 1Y (TTM)24.82%
EPS 3Y20.14%
EPS 5Y17.9%
EPS Q2Q%45.59%
Revenue 1Y (TTM)40.3%
Revenue growth 3Y23.39%
Revenue growth 5Y17.94%
Sales Q2Q%24.71%
3.2 Future
The Earnings Per Share is expected to grow by 24.96% on average over the next years. This is a very strong growth
Based on estimates for the next years, AVGO will show a quite strong growth in Revenue. The Revenue will grow by 18.89% on average per year.
EPS Next Y38.08%
EPS Next 2Y27.48%
EPS Next 3Y23.56%
EPS Next 5Y24.96%
Revenue Next Year20.8%
Revenue Next 2Y18.32%
Revenue Next 3Y17.01%
Revenue Next 5Y18.89%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 43.01, the valuation of AVGO can be described as expensive.
AVGO's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 25.91, AVGO is valued quite expensively.
The Price/Forward Earnings ratio is 29.22, which means the current valuation is very expensive for AVGO.
AVGO's Price/Forward Earnings ratio is in line with the industry average.
AVGO is valuated rather expensively when we compare the Price/Forward Earnings ratio to 21.85, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.01 | ||
| Fwd PE | 29.22 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AVGO is on the same level as its industry peers.
The rest of the industry has a similar Price/Free Cash Flow ratio as AVGO.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.28 | ||
| EV/EBITDA | 39.44 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of AVGO may justify a higher PE ratio.
AVGO's earnings are expected to grow with 23.56% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.13
PEG (5Y)2.4
EPS Next 2Y27.48%
EPS Next 3Y23.56%
5. Dividend
5.1 Amount
AVGO has a Yearly Dividend Yield of 1.01%. Purely for dividend investing, there may be better candidates out there.
AVGO's Dividend Yield is a higher than the industry average which is at 2.41.
Compared to an average S&P500 Dividend Yield of 2.36, AVGO's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.01% |
5.2 History
The dividend of AVGO is nicely growing with an annual growth rate of 16.17%!
AVGO has been paying a dividend for at least 10 years, so it has a reliable track record.
AVGO has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)16.17%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
100.79% of the earnings are spent on dividend by AVGO. This is not a sustainable payout ratio.
AVGO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP100.79%
EPS Next 2Y27.48%
EPS Next 3Y23.56%
230.53
+0.8 (+0.35%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners78.95%
Inst Owner Change1.47%
Ins Owners2.12%
Ins Owner Change-3.29%
Market Cap1083.94B
Analysts83.48
Price Target239.92 (4.07%)
Short Float %1.07%
Short Ratio1.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.01% |
Yearly Dividend2.22
Dividend Growth(5Y)16.17%
DP100.79%
Div Incr Years13
Div Non Decr Years13
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.08%
Min EPS beat(2)0.77%
Max EPS beat(2)5.39%
EPS beat(4)3
Avg EPS beat(4)1.59%
Min EPS beat(4)-0.91%
Max EPS beat(4)5.39%
EPS beat(8)5
Avg EPS beat(8)1.16%
EPS beat(12)7
Avg EPS beat(12)0.92%
EPS beat(16)9
Avg EPS beat(16)0.75%
Revenue beat(2)1
Avg Revenue beat(2)-1.06%
Min Revenue beat(2)-2.22%
Max Revenue beat(2)0.09%
Revenue beat(4)2
Avg Revenue beat(4)-0.36%
Min Revenue beat(4)-2.22%
Max Revenue beat(4)1.79%
Revenue beat(8)3
Avg Revenue beat(8)-1%
Revenue beat(12)4
Avg Revenue beat(12)-1%
Revenue beat(16)4
Avg Revenue beat(16)-0.99%
PT rev (1m)-4.49%
PT rev (3m)-2.21%
EPS NQ rev (1m)0.24%
EPS NQ rev (3m)5.33%
EPS NY rev (1m)-0.11%
EPS NY rev (3m)4.9%
Revenue NQ rev (1m)0.16%
Revenue NQ rev (3m)1.72%
Revenue NY rev (1m)-0.14%
Revenue NY rev (3m)1.73%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.01 | ||
| Fwd PE | 29.22 | ||
| P/S | 19.88 | ||
| P/FCF | 52.28 | ||
| P/OCF | 50.98 | ||
| P/B | 15.53 | ||
| P/tB | N/A | ||
| EV/EBITDA | 39.44 |
EPS(TTM)5.36
EY2.33%
EPS(NY)7.89
Fwd EY3.42%
FCF(TTM)4.41
FCFY1.91%
OCF(TTM)4.52
OCFY1.96%
SpS11.6
BVpS14.84
TBVpS-14.18
PEG (NY)1.13
PEG (5Y)2.4
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.09% | ||
| ROE | 14.43% | ||
| ROCE | 13.09% | ||
| ROIC | 9.9% | ||
| ROICexc | 10.56% | ||
| ROICexgc | 548.47% | ||
| OM | 34.66% | ||
| PM (TTM) | 18.47% | ||
| GM | 65.02% | ||
| FCFM | 38.02% |
ROA(3y)12.74%
ROA(5y)10.05%
ROE(3y)38.95%
ROE(5y)30.76%
ROIC(3y)14.76%
ROIC(5y)11.78%
ROICexc(3y)18.03%
ROICexc(5y)14.28%
ROICexgc(3y)580.38%
ROICexgc(5y)446.38%
ROCE(3y)18.99%
ROCE(5y)15.15%
ROICexcg growth 3Y52.32%
ROICexcg growth 5Y48.04%
ROICexc growth 3Y-10.43%
ROICexc growth 5Y7.73%
OM growth 3Y-2.23%
OM growth 5Y9.44%
PM growth 3Y-21.3%
PM growth 5Y-0.85%
GM growth 3Y1.13%
GM growth 5Y2.71%
F-Score6
Asset Turnover0.33
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.93 | ||
| Debt/FCF | 3.21 | ||
| Debt/EBITDA | 2.26 | ||
| Cap/Depr | 5.35% | ||
| Cap/Sales | 0.96% | ||
| Interest Coverage | 5.96 | ||
| Cash Conversion | 73.97% | ||
| Profit Quality | 205.84% | ||
| Current Ratio | 1 | ||
| Quick Ratio | 0.91 | ||
| Altman-Z | 7.51 |
F-Score6
WACC11.47%
ROIC/WACC0.86
Cap/Depr(3y)8.59%
Cap/Depr(5y)7.96%
Cap/Sales(3y)1.2%
Cap/Sales(5y)1.43%
Profit Quality(3y)199.96%
Profit Quality(5y)248.47%
High Growth Momentum
Growth
EPS 1Y (TTM)24.82%
EPS 3Y20.14%
EPS 5Y17.9%
EPS Q2Q%45.59%
EPS Next Y38.08%
EPS Next 2Y27.48%
EPS Next 3Y23.56%
EPS Next 5Y24.96%
Revenue 1Y (TTM)40.3%
Revenue growth 3Y23.39%
Revenue growth 5Y17.94%
Sales Q2Q%24.71%
Revenue Next Year20.8%
Revenue Next 2Y18.32%
Revenue Next 3Y17.01%
Revenue Next 5Y18.89%
EBIT growth 1Y24.88%
EBIT growth 3Y20.65%
EBIT growth 5Y29.07%
EBIT Next Year43.77%
EBIT Next 3Y23.48%
EBIT Next 5Y23.08%
FCF growth 1Y22.98%
FCF growth 3Y13.38%
FCF growth 5Y15.95%
OCF growth 1Y22.99%
OCF growth 3Y13.19%
OCF growth 5Y15.53%