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. AVGO scores excellent on profitability, but there are some minor concerns on its financial health. AVGO is valued quite expensive, but it does show an excellent growth.
1. Profitability
1.1 Basic Checks
In the past year AVGO was profitable.
In the past year AVGO had a positive cash flow from operations.
Each year in the past 5 years AVGO has been profitable.
In the past 5 years AVGO always reported a positive cash flow from operatings.
1.2 Ratios
AVGO has a better Return On Assets (7.85%) than 77.27% of its industry peers.
With an excellent Return On Equity value of 18.56%, AVGO belongs to the best of the industry, outperforming 84.55% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 11.67%, AVGO belongs to the top of the industry, outperforming 82.73% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for AVGO is above the industry average of 10.57%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.85% | ||
| ROE | 18.56% | ||
| ROIC | 11.67% |
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
The Profit Margin of AVGO (22.64%) is better than 84.55% of its industry peers.
AVGO's Profit Margin has been stable in the last couple of years.
AVGO has a better Operating Margin (37.91%) than 96.36% of its industry peers.
AVGO's Operating Margin has improved in the last couple of years.
The Gross Margin of AVGO (66.35%) is better than 90.00% of its industry peers.
AVGO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 37.91% | ||
| PM (TTM) | 22.64% | ||
| GM | 66.35% |
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.
Compared to 1 year ago, AVGO has more shares outstanding
Compared to 5 years ago, AVGO has more shares outstanding
The debt/assets ratio for AVGO has been reduced compared to a year ago.
2.2 Solvency
AVGO has an Altman-Z score of 8.32. This indicates that AVGO is financially healthy and has little risk of bankruptcy at the moment.
AVGO's Altman-Z score of 8.32 is fine compared to the rest of the industry. AVGO outperforms 72.73% of its industry peers.
The Debt to FCF ratio of AVGO is 2.96, which is a good value as it means it would take AVGO, 2.96 years of fcf income to pay off all of its debts.
AVGO has a Debt to FCF ratio of 2.96. This is in the better half of the industry: AVGO outperforms 61.82% of its industry peers.
AVGO has a Debt/Equity ratio of 0.89. This is a neutral value indicating AVGO is somewhat dependend on debt financing.
The Debt to Equity ratio of AVGO (0.89) is worse than 83.64% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.89 | ||
| Debt/FCF | 2.96 | ||
| Altman-Z | 8.32 |
ROIC/WACC1.04
WACC11.2%
2.3 Liquidity
A Current Ratio of 1.08 indicates that AVGO should not have too much problems paying its short term obligations.
AVGO has a Current ratio of 1.08. This is amonst the worse of the industry: AVGO underperforms 90.91% of its industry peers.
A Quick Ratio of 0.98 indicates that AVGO may have some problems paying its short term obligations.
With a Quick ratio value of 0.98, AVGO is not doing good in the industry: 88.18% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.08 | ||
| Quick Ratio | 0.98 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 34.10% 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.
Looking at the last year, AVGO shows a very strong growth in Revenue. The Revenue has grown by 33.85%.
The Revenue has been growing by 17.94% on average over the past years. This is quite good.
EPS 1Y (TTM)34.1%
EPS 3Y20.14%
EPS 5Y17.9%
EPS Q2Q%44.16%
Revenue 1Y (TTM)33.85%
Revenue growth 3Y23.39%
Revenue growth 5Y17.94%
Sales Q2Q%20.16%
3.2 Future
AVGO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 23.12% yearly.
Based on estimates for the next years, AVGO will show a quite strong growth in Revenue. The Revenue will grow by 18.41% on average per year.
EPS Next Y38.08%
EPS Next 2Y27.48%
EPS Next 3Y23.56%
EPS Next 5Y23.12%
Revenue Next Year20.99%
Revenue Next 2Y18.5%
Revenue Next 3Y17.16%
Revenue Next 5Y18.41%
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.
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
With a Price/Earnings ratio of 43.31, AVGO can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as AVGO.
AVGO's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 26.55.
With a Price/Forward Earnings ratio of 32.06, AVGO can be considered very expensive at the moment.
The rest of the industry has a similar Price/Forward Earnings ratio as AVGO.
AVGO is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.40, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.31 | ||
| Fwd PE | 32.06 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as AVGO.
AVGO's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.39 | ||
| EV/EBITDA | 40.1 |
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)1.14
PEG (5Y)2.42
EPS Next 2Y27.48%
EPS Next 3Y23.56%
5. Dividend
5.1 Amount
With a yearly dividend of 0.96%, AVGO is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.61, AVGO pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.39, AVGO's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.96% |
5.2 History
The dividend of AVGO is nicely growing with an annual growth rate of 16.17%!
AVGO has paid a dividend for at least 10 years, which is 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 Years14
Div Non Decr Years14
5.3 Sustainability
81.25% 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.
DP81.25%
EPS Next 2Y27.48%
EPS Next 3Y23.56%
252.91
+8.28 (+3.38%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners78.95%
Inst Owner Change1.51%
Ins Owners2.12%
Ins Owner Change-3.29%
Market Cap1189.17B
Analysts83.33
Price Target246.28 (-2.62%)
Short Float %1.2%
Short Ratio2.03
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.96% |
Yearly Dividend2.22
Dividend Growth(5Y)16.17%
DP81.25%
Div Incr Years14
Div Non Decr Years14
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)2.23%
Min EPS beat(2)-0.93%
Max EPS beat(2)5.39%
EPS beat(4)3
Avg EPS beat(4)1.58%
Min EPS beat(4)-0.93%
Max EPS beat(4)5.39%
EPS beat(8)4
Avg EPS beat(8)1%
EPS beat(12)6
Avg EPS beat(12)0.67%
EPS beat(16)8
Avg EPS beat(16)0.63%
Revenue beat(2)1
Avg Revenue beat(2)-0.9%
Min Revenue beat(2)-1.89%
Max Revenue beat(2)0.09%
Revenue beat(4)1
Avg Revenue beat(4)-1.28%
Min Revenue beat(4)-2.22%
Max Revenue beat(4)0.09%
Revenue beat(8)3
Avg Revenue beat(8)-1.03%
Revenue beat(12)3
Avg Revenue beat(12)-1.19%
Revenue beat(16)4
Avg Revenue beat(16)-1.09%
PT rev (1m)2.65%
PT rev (3m)-1.03%
EPS NQ rev (1m)0.03%
EPS NQ rev (3m)5.32%
EPS NY rev (1m)-0.11%
EPS NY rev (3m)4.96%
Revenue NQ rev (1m)0.16%
Revenue NQ rev (3m)1.54%
Revenue NY rev (1m)0.15%
Revenue NY rev (3m)1.68%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.31 | ||
| Fwd PE | 32.06 | ||
| P/S | 20.85 | ||
| P/FCF | 52.39 | ||
| P/OCF | 51.18 | ||
| P/B | 17.09 | ||
| P/tB | N/A | ||
| EV/EBITDA | 40.1 |
EPS(TTM)5.84
EY2.31%
EPS(NY)7.89
Fwd EY3.12%
FCF(TTM)4.83
FCFY1.91%
OCF(TTM)4.94
OCFY1.95%
SpS12.13
BVpS14.8
TBVpS-13.74
PEG (NY)1.14
PEG (5Y)2.42
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.85% | ||
| ROE | 18.56% | ||
| ROCE | 15.01% | ||
| ROIC | 11.67% | ||
| ROICexc | 12.49% | ||
| ROICexgc | 4580.5% | ||
| OM | 37.91% | ||
| PM (TTM) | 22.64% | ||
| GM | 66.35% | ||
| FCFM | 39.79% |
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-Score8
Asset Turnover0.35
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.89 | ||
| Debt/FCF | 2.96 | ||
| Debt/EBITDA | 1.99 | ||
| Cap/Depr | 5.68% | ||
| Cap/Sales | 0.94% | ||
| Interest Coverage | 7.39 | ||
| Cash Conversion | 74.71% | ||
| Profit Quality | 175.71% | ||
| Current Ratio | 1.08 | ||
| Quick Ratio | 0.98 | ||
| Altman-Z | 8.32 |
F-Score8
WACC11.2%
ROIC/WACC1.04
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)34.1%
EPS 3Y20.14%
EPS 5Y17.9%
EPS Q2Q%44.16%
EPS Next Y38.08%
EPS Next 2Y27.48%
EPS Next 3Y23.56%
EPS Next 5Y23.12%
Revenue 1Y (TTM)33.85%
Revenue growth 3Y23.39%
Revenue growth 5Y17.94%
Sales Q2Q%20.16%
Revenue Next Year20.99%
Revenue Next 2Y18.5%
Revenue Next 3Y17.16%
Revenue Next 5Y18.41%
EBIT growth 1Y49.88%
EBIT growth 3Y20.65%
EBIT growth 5Y29.07%
EBIT Next Year43.51%
EBIT Next 3Y23.41%
EBIT Next 5Y23.08%
FCF growth 1Y32.87%
FCF growth 3Y13.38%
FCF growth 5Y15.95%
OCF growth 1Y32.43%
OCF growth 3Y13.19%
OCF growth 5Y15.53%