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 109 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 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.
AVGO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a decent Return On Assets value of 6.09%, AVGO is doing good in the industry, outperforming 67.89% of the companies in the same industry.
The Return On Equity of AVGO (14.43%) is better than 77.06% of its industry peers.
With a decent Return On Invested Capital value of 9.90%, AVGO is doing good in the industry, outperforming 79.82% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for AVGO is above the industry average of 11.14%.
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's Profit Margin of 18.47% is fine compared to the rest of the industry. AVGO outperforms 77.98% 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 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.
With an excellent Gross Margin value of 65.02%, AVGO belongs to the best of the industry, outperforming 89.91% 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 | 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), AVGO 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.
AVGO has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.78 indicates that AVGO is not in any danger for bankruptcy at the moment.
The Altman-Z score of AVGO (5.78) is better than 67.89% 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 better Debt to FCF ratio (3.21) than 63.30% of its industry peers.
A Debt/Equity ratio of 0.93 indicates that AVGO is somewhat dependend on debt financing.
AVGO has a worse Debt to Equity ratio (0.93) than 83.49% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.93 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 5.78 |
ROIC/WACC0.9
WACC10.94%
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 90.83% of the companies in the same industry.
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 87.16% 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.
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.
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 Y38.33%
EPS Next 2Y27.86%
EPS Next 3Y23.83%
EPS Next 5Y24.96%
Revenue Next Year20.97%
Revenue Next 2Y18.53%
Revenue Next 3Y17.08%
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
A Price/Earnings ratio of 31.90 indicates a quite expensive valuation of AVGO.
The rest of the industry has a similar Price/Earnings ratio as AVGO.
Compared to an average S&P500 Price/Earnings ratio of 28.29, AVGO is valued at the same level.
AVGO is valuated rather expensively with a Price/Forward Earnings ratio of 21.54.
The rest of the industry has a similar Price/Forward Earnings ratio as AVGO.
AVGO is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.08, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.9 | ||
| Fwd PE | 21.54 |
4.2 Price Multiples
AVGO's Enterprise Value to EBITDA is on the same level as the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of AVGO indicates a somewhat cheap valuation: AVGO is cheaper than 65.14% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 38.78 | ||
| EV/EBITDA | 29.83 |
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.
The excellent profitability rating of AVGO may justify a higher PE ratio.
A more expensive valuation may be justified as AVGO's earnings are expected to grow with 23.83% in the coming years.
PEG (NY)0.83
PEG (5Y)1.78
EPS Next 2Y27.86%
EPS Next 3Y23.83%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.37%, AVGO has a reasonable but not impressive dividend return.
In the last 3 months the price of AVGO has falen by -27.99%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
AVGO's Dividend Yield is rather good when compared to the industry average which is at 3.10. AVGO pays more dividend than 80.73% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.57, AVGO's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.37% |
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.
The dividend of AVGO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP100.79%
EPS Next 2Y27.86%
EPS Next 3Y23.83%
170.99
-3.62 (-2.07%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners78.95%
Inst Owner Change0%
Ins Owners2.12%
Ins Owner Change29.23%
Market Cap803.99B
Analysts83.48
Price Target251.2 (46.91%)
Short Float %1.25%
Short Ratio1.9
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.37% |
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)0.95%
PT rev (3m)7.09%
EPS NQ rev (1m)0.86%
EPS NQ rev (3m)4.41%
EPS NY rev (1m)5.15%
EPS NY rev (3m)4.96%
Revenue NQ rev (1m)0.18%
Revenue NQ rev (3m)1.73%
Revenue NY rev (1m)1.67%
Revenue NY rev (3m)1.95%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.9 | ||
| Fwd PE | 21.54 | ||
| P/S | 14.74 | ||
| P/FCF | 38.78 | ||
| P/OCF | 37.82 | ||
| P/B | 11.52 | ||
| P/tB | N/A | ||
| EV/EBITDA | 29.83 |
EPS(TTM)5.36
EY3.13%
EPS(NY)7.94
Fwd EY4.64%
FCF(TTM)4.41
FCFY2.58%
OCF(TTM)4.52
OCFY2.64%
SpS11.6
BVpS14.84
TBVpS-14.18
PEG (NY)0.83
PEG (5Y)1.78
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 | 5.78 |
F-Score6
WACC10.94%
ROIC/WACC0.9
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 Y38.33%
EPS Next 2Y27.86%
EPS Next 3Y23.83%
EPS Next 5Y24.96%
Revenue 1Y (TTM)40.3%
Revenue growth 3Y23.39%
Revenue growth 5Y17.94%
Sales Q2Q%24.71%
Revenue Next Year20.97%
Revenue Next 2Y18.53%
Revenue Next 3Y17.08%
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%