BROADCOM INC (AVGO) Stock Fundamental Analysis
NASDAQ:AVGO - Nasdaq - US11135F1012 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to AVGO. AVGO was compared to 109 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 not overvalued while it is showing excellent growth. This is an interesting combination.
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 67.89% of its industry peers.
AVGO has a better Return On Equity (14.43%) than 76.15% of its industry peers.
Looking at the Return On Invested Capital, with a value of 9.90%, AVGO is in the better half of the industry, outperforming 79.82% of the companies in the same industry.
AVGO had an Average Return On Invested Capital over the past 3 years of 14.76%. This is above the industry average of 11.29%.
The last Return On Invested Capital (9.90%) for AVGO is well below the 3 year average (14.76%), which needs to be investigated, but indicates that AVGO had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.09% | ||
| 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 Profit Margin of 18.47%. This is in the better half of the industry: AVGO outperforms 77.98% of its industry peers.
AVGO's Profit Margin has been stable in the last couple of years.
AVGO has a better Operating Margin (34.66%) than 95.41% of its industry peers.
AVGO's Operating Margin has improved in the last couple of years.
AVGO has a Gross Margin of 65.02%. This is amongst the best in the industry. AVGO outperforms 90.83% 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.
AVGO has more shares outstanding than it did 5 years ago.
The debt/assets ratio for AVGO has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 6.56 indicates that AVGO is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 6.56, AVGO is in the better half of the industry, outperforming 70.64% of the companies in the same industry.
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.
With a decent Debt to FCF ratio value of 3.21, AVGO is doing good in the industry, outperforming 62.39% of the companies in the same industry.
AVGO has a Debt/Equity ratio of 0.93. This is a neutral value indicating AVGO is somewhat dependend on debt financing.
AVGO has a worse Debt to Equity ratio (0.93) than 84.40% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.93 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 6.56 |
ROIC/WACC1.06
WACC9.33%
2.3 Liquidity
A Current Ratio of 1.00 indicates that AVGO should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.00, AVGO is doing worse than 93.58% of the companies in the same industry.
A Quick Ratio of 0.91 indicates that AVGO may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.91, AVGO is doing worse than 89.91% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1 | ||
| Quick Ratio | 0.91 |
3. Growth
3.1 Past
AVGO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 24.82%, which is quite impressive.
Measured over the past years, AVGO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 17.90% on average per year.
AVGO shows a strong growth in Revenue. In the last year, the Revenue has grown by 40.30%.
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
Based on estimates for the next years, AVGO will show a very strong growth in Earnings Per Share. The EPS will grow by 24.96% on average per year.
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 Year20.82%
Revenue Next 2Y18.34%
Revenue Next 3Y17.01%
Revenue Next 5Y18.89%
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.
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
Based on the Price/Earnings ratio of 36.82, the valuation of AVGO can be described as expensive.
Compared to the rest of the industry, the Price/Earnings ratio of AVGO is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 27.85. AVGO is valued slightly more expensive when compared to this.
Based on the Price/Forward Earnings ratio of 24.96, the valuation of AVGO can be described as rather expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AVGO is on the same level as its industry peers.
AVGO's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 20.77.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.82 | ||
| Fwd PE | 24.96 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as AVGO.
Based on the Price/Free Cash Flow ratio, AVGO is valued a bit cheaper than 63.30% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 44.75 | ||
| EV/EBITDA | 34.14 |
4.3 Compensation for Growth
AVGO's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap 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)0.96
PEG (5Y)2.06
EPS Next 2Y27.6%
EPS Next 3Y23.56%
5. Dividend
5.1 Amount
AVGO has a Yearly Dividend Yield of 1.25%.
AVGO's Dividend Yield is rather good when compared to the industry average which is at 2.77. AVGO pays more dividend than 81.65% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, AVGO's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.25% |
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 2Y27.6%
EPS Next 3Y23.56%
197.33
+4.86 (+2.53%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners78.95%
Inst Owner Change0.46%
Ins Owners2.12%
Ins Owner Change28.77%
Market Cap927.84B
Analysts83.48
Price Target239.92 (21.58%)
Short Float %1.16%
Short Ratio1.59
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.25% |
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)-3.59%
PT rev (3m)2.28%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)4.41%
EPS NY rev (1m)-0.08%
EPS NY rev (3m)4.88%
Revenue NQ rev (1m)0.01%
Revenue NQ rev (3m)1.73%
Revenue NY rev (1m)1.54%
Revenue NY rev (3m)1.78%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.82 | ||
| Fwd PE | 24.96 | ||
| P/S | 17.02 | ||
| P/FCF | 44.75 | ||
| P/OCF | 43.64 | ||
| P/B | 13.29 | ||
| P/tB | N/A | ||
| EV/EBITDA | 34.14 |
EPS(TTM)5.36
EY2.72%
EPS(NY)7.9
Fwd EY4.01%
FCF(TTM)4.41
FCFY2.23%
OCF(TTM)4.52
OCFY2.29%
SpS11.6
BVpS14.84
TBVpS-14.18
PEG (NY)0.96
PEG (5Y)2.06
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 | 6.56 |
F-Score6
WACC9.33%
ROIC/WACC1.06
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 Year20.82%
Revenue Next 2Y18.34%
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%