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 108 industry peers in the Semiconductors & Semiconductor Equipment industry. While AVGO has a great profitability rating, there are some minor concerns on its financial health. AVGO is not overvalued while it is showing excellent growth. This is an interesting combination. With these ratings, AVGO could be worth investigating further for growth investing!.
1. Profitability
1.1 Basic Checks
AVGO had positive earnings in the past year.
AVGO had a positive operating cash flow in the past year.
In the past 5 years AVGO has always been profitable.
In the past 5 years AVGO always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of AVGO (3.56%) is better than 60.19% of its industry peers.
AVGO has a better Return On Equity (8.71%) than 65.74% of its industry peers.
With a decent Return On Invested Capital value of 7.96%, AVGO is doing good in the industry, outperforming 75.00% 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 11.67%.
The last Return On Invested Capital (7.96%) 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 | 3.56% | ||
| ROE | 8.71% | ||
| ROIC | 7.96% |
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 11.43% is fine compared to the rest of the industry. AVGO outperforms 66.67% of its industry peers.
AVGO's Profit Margin has been stable in the last couple of years.
Looking at the Operating Margin, with a value of 29.57%, AVGO belongs to the top of the industry, outperforming 90.74% of the companies in the same industry.
AVGO's Operating Margin has improved in the last couple of years.
AVGO's Gross Margin of 63.53% is amongst the best of the industry. AVGO outperforms 88.89% of its industry peers.
AVGO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 29.57% | ||
| PM (TTM) | 11.43% | ||
| GM | 63.53% |
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.
AVGO has more shares outstanding than it did 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 7.15 indicates that AVGO is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 7.15, AVGO is in the better half of the industry, outperforming 68.52% of the companies in the same industry.
AVGO has a debt to FCF ratio of 3.48. This is a good value and a sign of high solvency as AVGO would need 3.48 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.48, AVGO is in the better half of the industry, outperforming 62.04% of the companies in the same industry.
A Debt/Equity ratio of 0.98 indicates that AVGO is somewhat dependend on debt financing.
AVGO has a Debt to Equity ratio of 0.98. This is amonst the worse of the industry: AVGO underperforms 83.33% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.98 | ||
| Debt/FCF | 3.48 | ||
| Altman-Z | 7.15 |
ROIC/WACC0.68
WACC11.76%
2.3 Liquidity
A Current Ratio of 1.17 indicates that AVGO should not have too much problems paying its short term obligations.
AVGO has a worse Current ratio (1.17) than 87.04% of its industry peers.
AVGO has a Quick Ratio of 1.07. This is a normal value and indicates that AVGO is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of AVGO (1.07) is worse than 83.33% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.17 | ||
| Quick Ratio | 1.07 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 14.91% 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 43.99%.
AVGO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 17.94% yearly.
EPS 1Y (TTM)14.91%
EPS 3Y20.14%
EPS 5Y17.9%
EPS Q2Q%28.39%
Revenue 1Y (TTM)43.99%
Revenue growth 3Y23.39%
Revenue growth 5Y17.94%
Sales Q2Q%51.2%
3.2 Future
AVGO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 24.06% yearly.
The Revenue is expected to grow by 18.03% on average over the next years. This is quite good.
EPS Next Y31.63%
EPS Next 2Y25.4%
EPS Next 3Y23.41%
EPS Next 5Y24.06%
Revenue Next Year18.74%
Revenue Next 2Y17.39%
Revenue Next 3Y16.65%
Revenue Next 5Y18.03%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
A Price/Earnings ratio of 44.99 indicates a quite expensive valuation of 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 (29.63), we can say AVGO is valued expensively.
A Price/Forward Earnings ratio of 34.22 indicates a quite expensive valuation of AVGO.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AVGO is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.68, AVGO is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.99 | ||
| Fwd PE | 34.22 |
4.2 Price Multiples
AVGO's Enterprise Value to EBITDA is on the same level as the industry average.
65.74% of the companies in the same industry are more expensive than AVGO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.79 | ||
| EV/EBITDA | 44.38 |
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.
A more expensive valuation may be justified as AVGO's earnings are expected to grow with 23.41% in the coming years.
PEG (NY)1.42
PEG (5Y)2.51
EPS Next 2Y25.4%
EPS Next 3Y23.41%
5. Dividend
5.1 Amount
AVGO has a Yearly Dividend Yield of 1.04%.
Compared to an average industry Dividend Yield of 2.23, AVGO pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.27, AVGO's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
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 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 166.48% of its income as dividend. This is not a sustainable payout ratio.
AVGO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP166.48%
EPS Next 2Y25.4%
EPS Next 3Y23.41%
218.66
-8.08 (-3.56%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners78.95%
Inst Owner Change5.69%
Ins Owners2.12%
Ins Owner Change16.05%
Market Cap1024.94B
Analysts82.61
Price Target248.05 (13.44%)
Short Float %1.13%
Short Ratio1.45
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
Yearly Dividend2.22
Dividend Growth(5Y)16.17%
DP166.48%
Div Incr Years13
Div Non Decr Years13
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)0.93%
Min EPS beat(2)0.77%
Max EPS beat(2)1.09%
EPS beat(4)3
Avg EPS beat(4)1.41%
Min EPS beat(4)-0.91%
Max EPS beat(4)4.69%
EPS beat(8)5
Avg EPS beat(8)0.52%
EPS beat(12)7
Avg EPS beat(12)0.62%
EPS beat(16)8
Avg EPS beat(16)0.33%
Revenue beat(2)0
Avg Revenue beat(2)-1.67%
Min Revenue beat(2)-2.22%
Max Revenue beat(2)-1.11%
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)2
Avg Revenue beat(8)-1.24%
Revenue beat(12)3
Avg Revenue beat(12)-1.05%
Revenue beat(16)3
Avg Revenue beat(16)-1.09%
PT rev (1m)4.59%
PT rev (3m)23.06%
EPS NQ rev (1m)-0.91%
EPS NQ rev (3m)3.11%
EPS NY rev (1m)-0.12%
EPS NY rev (3m)1.61%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)0.38%
Revenue NY rev (1m)0.07%
Revenue NY rev (3m)1.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.99 | ||
| Fwd PE | 34.22 | ||
| P/S | 19.87 | ||
| P/FCF | 52.79 | ||
| P/OCF | 51.34 | ||
| P/B | 15.14 | ||
| P/tB | N/A | ||
| EV/EBITDA | 44.38 |
EPS(TTM)4.86
EY2.22%
EPS(NY)6.39
Fwd EY2.92%
FCF(TTM)4.14
FCFY1.89%
OCF(TTM)4.26
OCFY1.95%
SpS11
BVpS14.44
TBVpS-15.1
PEG (NY)1.42
PEG (5Y)2.51
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.56% | ||
| ROE | 8.71% | ||
| ROCE | 10.24% | ||
| ROIC | 7.96% | ||
| ROICexc | 8.49% | ||
| ROICexgc | 1036.3% | ||
| OM | 29.57% | ||
| PM (TTM) | 11.43% | ||
| GM | 63.53% | ||
| FCFM | 37.64% |
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-Score5
Asset Turnover0.31
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.98 | ||
| Debt/FCF | 3.48 | ||
| Debt/EBITDA | 2.62 | ||
| Cap/Depr | 5.47% | ||
| Cap/Sales | 1.06% | ||
| Interest Coverage | 4.69 | ||
| Cash Conversion | 79.03% | ||
| Profit Quality | 329.33% | ||
| Current Ratio | 1.17 | ||
| Quick Ratio | 1.07 | ||
| Altman-Z | 7.15 |
F-Score5
WACC11.76%
ROIC/WACC0.68
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)14.91%
EPS 3Y20.14%
EPS 5Y17.9%
EPS Q2Q%28.39%
EPS Next Y31.63%
EPS Next 2Y25.4%
EPS Next 3Y23.41%
EPS Next 5Y24.06%
Revenue 1Y (TTM)43.99%
Revenue growth 3Y23.39%
Revenue growth 5Y17.94%
Sales Q2Q%51.2%
Revenue Next Year18.74%
Revenue Next 2Y17.39%
Revenue Next 3Y16.65%
Revenue Next 5Y18.03%
EBIT growth 1Y-7.32%
EBIT growth 3Y20.65%
EBIT growth 5Y29.07%
EBIT Next Year37.54%
EBIT Next 3Y23.19%
EBIT Next 5Y22.34%
FCF growth 1Y10.1%
FCF growth 3Y13.38%
FCF growth 5Y15.95%
OCF growth 1Y10.38%
OCF growth 3Y13.19%
OCF growth 5Y15.53%