BROADCOM INC (AVGO)
US11135F1012 - Common Stock
We assign a fundamental rating of 6 out of 10 to AVGO. AVGO was compared to 107 industry peers in the Semiconductors & Semiconductor Equipment industry. While AVGO belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. AVGO has a correct valuation and a medium growth rate.
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.
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
With a decent Return On Assets value of 6.54%, AVGO is doing good in the industry, outperforming 65.09% of the companies in the same industry.
With a decent Return On Equity value of 16.55%, AVGO is doing good in the industry, outperforming 76.42% of the companies in the same industry.
AVGO's Return On Invested Capital of 7.59% is fine compared to the rest 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 above the industry average of 10.78%.
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
Looking at the Profit Margin, with a value of 29.93%, AVGO belongs to the top of the industry, outperforming 92.45% of the companies in the same industry.
In the last couple of years the Profit Margin of AVGO has declined.
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.
With an excellent Gross Margin value of 67.30%, AVGO belongs to the best of the industry, outperforming 88.68% of the companies in the same industry.
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.
The number of shares outstanding for AVGO has been reduced 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 about the same debt to assets ratio.
2.2 Solvency
An Altman-Z score of 4.02 indicates that AVGO is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.02, AVGO is in line with its industry, outperforming 55.66% of the companies in the same 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's Debt to FCF ratio of 4.13 is in line compared to the rest of the industry. AVGO outperforms 57.55% of its industry peers.
A Debt/Equity ratio of 1.05 is on the high side and indicates that AVGO has dependencies on debt financing.
AVGO's Debt to Equity ratio of 1.05 is on the low side compared to the rest of the industry. AVGO is outperformed by 80.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.05 | ||
| Debt/FCF | 4.13 | ||
| Altman-Z | 4.02 |
ROIC/WACC0.65
WACC11.63%
2.3 Liquidity
A Current Ratio of 1.33 indicates that AVGO should not have too much problems paying its short term obligations.
AVGO has a Current ratio of 1.33. This is amonst the worse of the industry: AVGO underperforms 83.96% of its industry peers.
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.
AVGO has a worse Quick ratio (1.24) 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.
Measured over the past years, AVGO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.19% on average per year.
Looking at the last year, AVGO shows a quite strong growth in Revenue. The Revenue has grown by 12.94% in the last year.
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
AVGO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.21% yearly.
The Revenue is expected to grow by 14.34% on average over the next years. This is quite good.
EPS Next Y13.26%
EPS Next 2Y17.26%
EPS Next 3Y14.42%
EPS Next 5Y7.21%
Revenue Next Year38.88%
Revenue Next 2Y25.59%
Revenue Next 3Y19.88%
Revenue Next 5Y14.34%
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 decreasing.
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
A Price/Earnings ratio of 31.32 indicates a quite expensive valuation of AVGO.
Compared to the rest of the industry, the Price/Earnings ratio of AVGO indicates a somewhat cheap valuation: AVGO is cheaper than 62.26% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 24.84, AVGO is valued a bit more expensive.
With a Price/Forward Earnings ratio of 23.14, AVGO is valued on the expensive side.
AVGO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. AVGO is cheaper than 73.58% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.35, AVGO is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.32 | ||
| Fwd PE | 23.14 |
4.2 Price Multiples
AVGO's Enterprise Value to EBITDA ratio is in line with the industry average.
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 | 33.86 | ||
| EV/EBITDA | 33.87 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates AVGO does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of AVGO may justify a higher PE ratio.
AVGO's earnings are expected to grow with 14.42% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.36
PEG (5Y)2.06
EPS Next 2Y17.26%
EPS Next 3Y14.42%
5. Dividend
5.1 Amount
AVGO has a Yearly Dividend Yield of 1.62%. Purely for dividend investing, there may be better candidates out there.
AVGO's Dividend Yield is rather good when compared to the industry average which is at 2.07. AVGO pays more dividend than 85.85% of the companies in the same industry.
Compared to the average S&P500 Dividend Yield of 2.41, AVGO is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.62% |
5.2 History
On average, the dividend of AVGO grows each year by 20.15%, 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)20.15%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
AVGO pays out 70.09% of its income as dividend. 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 (4/26/2024, 7:00:00 PM)
After market: 1344.07 0 (0%)1344.07
+49.65 (+3.84%)
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 Cap622.87B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.62% |
Dividend Growth(5Y)
DP
Div Incr Years
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Ex-Date
Surprises & Revisions
EPS beat(2)
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Revenue beat(2)
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PT rev (1m)
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EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.32 | ||
| Fwd PE | 23.14 | ||
| 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)2.36
PEG (5Y)2.06
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
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OCF growth 5Y