BROADCOM INC (AVGO) Stock Fundamental Analysis
NASDAQ:AVGO - Nasdaq - US11135F1012 - Common Stock - Currency: USD
Overall AVGO gets a fundamental rating of 6 out of 10. We evaluated AVGO against 110 industry peers in the Semiconductors & Semiconductor Equipment industry. AVGO has an excellent profitability rating, but there are some minor concerns on its financial health. AVGO is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one!
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.
In the past 5 years AVGO always reported a positive cash flow from operatings.
1.2 Ratios
AVGO has a better Return On Assets (6.09%) than 69.09% of its industry peers.
AVGO has a better Return On Equity (14.43%) than 77.27% of its industry peers.
AVGO has a better Return On Invested Capital (9.90%) than 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 11.30%.
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's Profit Margin of 18.47% is fine compared to the rest of the industry. AVGO outperforms 79.09% of its industry peers.
In the last couple of years the Profit Margin of AVGO has remained more or less at the same level.
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
AVGO has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for AVGO has been increased compared to 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 7.58 indicates that AVGO is not in any danger for bankruptcy at the moment.
AVGO has a better Altman-Z score (7.58) than 70.91% 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 62.73% of its industry peers.
A Debt/Equity ratio of 0.93 indicates that AVGO is somewhat dependend on debt financing.
The Debt to Equity ratio of AVGO (0.93) is worse than 83.64% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.93 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 7.58 |
ROIC/WACC1.02
WACC9.75%
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.
The Current ratio of AVGO (1.00) is worse than 93.64% of its industry peers.
AVGO has a Quick Ratio of 1.00. This is a bad value and indicates that AVGO is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.91, AVGO is doing worse than 90.00% of the companies in the same industry.
| 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.
AVGO shows a strong growth in Revenue. In the last year, the Revenue has grown by 40.30%.
Measured over the past years, AVGO shows a quite strong growth in Revenue. The Revenue has been growing by 17.94% on average per year.
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
AVGO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 24.96% yearly.
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 Y38.22%
EPS Next 2Y27.6%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 43.31, which means the current valuation is very expensive for AVGO.
The rest of the industry has a similar Price/Earnings ratio as AVGO.
When comparing the Price/Earnings ratio of AVGO to the average of the S&P500 Index (24.85), we can say AVGO is valued expensively.
Based on the Price/Forward Earnings ratio of 29.37, the valuation of AVGO can be described as expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as AVGO.
AVGO's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 20.89.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.31 | ||
| Fwd PE | 29.37 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as AVGO.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of AVGO indicates a somewhat cheap valuation: AVGO is cheaper than 60.91% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.64 | ||
| EV/EBITDA | 39.83 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
AVGO has an outstanding profitability rating, which 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)2.42
EPS Next 2Y27.6%
EPS Next 3Y23.56%
5. Dividend
5.1 Amount
AVGO has a Yearly Dividend Yield of 1.14%.
AVGO's Dividend Yield is a higher than the industry average which is at 2.53.
With a Dividend Yield of 1.14, AVGO pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.14% |
5.2 History
On average, the dividend of AVGO grows each year by 16.17%, which is quite nice.
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)16.17%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
AVGO pays out 100.79% of its income as dividend. This is not a sustainable payout ratio.
The dividend of AVGO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP100.79%
EPS Next 2Y27.6%
EPS Next 3Y23.56%
232.12
-0.3 (-0.13%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners78.95%
Inst Owner Change0.69%
Ins Owners2.12%
Ins Owner Change-3.25%
Market Cap1091.42B
Analysts83.48
Price Target239.92 (3.36%)
Short Float %1.07%
Short Ratio1.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.14% |
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)5.64%
EPS NY rev (1m)-0.08%
EPS NY rev (3m)5.2%
Revenue NQ rev (1m)0.16%
Revenue NQ rev (3m)1.95%
Revenue NY rev (1m)-0.14%
Revenue NY rev (3m)1.73%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.31 | ||
| Fwd PE | 29.37 | ||
| P/S | 20.02 | ||
| P/FCF | 52.64 | ||
| P/OCF | 51.34 | ||
| P/B | 15.64 | ||
| P/tB | N/A | ||
| EV/EBITDA | 39.83 |
EPS(TTM)5.36
EY2.31%
EPS(NY)7.9
Fwd EY3.41%
FCF(TTM)4.41
FCFY1.9%
OCF(TTM)4.52
OCFY1.95%
SpS11.6
BVpS14.84
TBVpS-14.18
PEG (NY)1.13
PEG (5Y)2.42
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 | 7.58 |
F-Score6
WACC9.75%
ROIC/WACC1.02
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 Y38.22%
EPS Next 2Y27.6%
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%