Broadcom Inc. (NASDAQ: AVGO)

Sector: Technology Industry: Semiconductors CIK: 0001730168
P/B 23.08
P/E 89.31
P/S 28.22
Market Cap 1,690.87 Bn
ROIC (Qtr) 12.91
Div Yield % 0.80
Rev 1y % (Qtr) 22.03
Total Debt (Qtr) 64.23 Bn
Debt/Equity (Qtr) 0.88

About

Broadcom Inc., with its ticker symbol AVGO, is a global technology leader that operates in the semiconductor and infrastructure software solutions industry. The company's main business activities involve providing semiconductor solutions for managing the movement of data in data center, service provider, and enterprise networking applications. Broadcom's product portfolio ranges from discrete devices to complex sub-systems that include multiple device types and may also incorporate firmware for interfacing between analog and digital systems. Broadcom's...

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Analysis

Pros

  • Healthy cash reserves of 10.72B provide 7.66x coverage of short-term debt 1.40B, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong operating cash flow of 25.44B provides 6.18x coverage of SG&A expenses 4.11B, showing efficient operational cost management.
  • Robust free cash flow of 24.93B exceeds capital expenditure of 508M by 49.07x, indicating strong organic growth funding capability.
  • Operating cash flow of 25.44B fully covers other non-current liabilities 12.81B by 1.99x, showing strong long-term stability.
  • Operating cash flow of 25.44B provides solid 1.52x coverage of current liabilities 16.70B, showing strong operational health.

Cons

  • Operating cash flow of 25.44B barely covers its investment activities of (345M), with a coverage ratio of -73.73, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 25.44B provides thin coverage of dividend payments of (10.83B) with a -2.35 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (345M) provide weak support for R&D spending of 10.23B, which is -0.03x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • High receivables of 6.49B relative to inventory of 2.18B (2.98 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • The company's operating cash flow of 25.44B shows concerning coverage of stock compensation expenses of 6.69B, with a 3.80 ratio indicating potential earnings quality issues.

Peer Comparison

Companies in the Semiconductors
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NVDA Nvidia Corp 4,276.26 Bn 43.11 22.85 10.48 Bn
2 AVGO Broadcom Inc. 1,690.87 Bn 89.31 28.22 64.23 Bn
3 TSM Taiwan Semiconductor Manufacturing Co Ltd 1,514.32 Bn 29.36 12.71 31.18 Bn
4 AMD Advanced Micro Devices Inc 343.27 Bn 103.83 10.72 3.87 Bn
5 MU Micron Technology Inc 269.16 Bn 31.52 7.20 15.28 Bn
6 INTC Intel Corp 249.55 Bn 1,260.33 4.67 46.55 Bn
7 QCOM Qualcomm Inc/De 195.62 Bn 35.30 4.42 14.81 Bn
8 TXN Texas Instruments Inc 163.92 Bn 32.50 9.49 14.05 Bn

Industry Comparisons

Current Valuation

Metric Value Industry Percentile
EV to Assets 10.56 3.95
EV to Cash from Ops. 68.74 -331.60
EV to Debt 27.23 86.14
EV to EBIT 75.68 -55.96
EV to EBITDA 55.07 20.88
EV to Free Cash Flow [EV/FCF] 70.14 -4.09
EV to Market Cap 1.03 0.80
EV to Revenue 29.18 18.79
Price to Book Value [P/B] 23.08 5.23
Price to Earnings [P/E] 89.31 12.47

Dividend Metrics

Metric Value Industry Percentile
Dividend Coverage Ratio 1.75 2.29
Dividend Payout Ratio % 57.10 8.00
Dividend per Basic Share 2.30 0.62
FCF Dividend Payout Ratio % 43.49 10.38
Interest Coverage 6.87 8.19

Growth Metrics

Metric Value Industry Percentile
Capex Growth (1y) % 4.33 -155.77
Cash and Equivalents Growth (1y) % 7.70 44.44
Dividend Growth (1y) % 13.02 5.30
EBIAT Growth (1y) % 221.25 34.22
EBITDA Growth (1y) % 48.34 47.50
EBIT Growth (1y) % 75.45 30.14
EBT Growth (1y) % 102.94 47.04
EPS Growth (1y) % 235.83 36.18
FCF Growth (1y) % 33.64 252.76
Gross Profit Growth (1y) % 33.87 43.92

Liquidity Ratios

Metric Value Industry Percentile
Asset Utilization Ratio 0.36 0.49
Cash Payout Ratio 0.42 0.09
Cash Ratio 0.64 2.23
Current Ratio 1.50 5.43
Debt to Equity Ratio 0.88 0.34
Interest Cover Ratio 6.87 8.19
Times Interest Earned 6.87 8.19

Profitability

Metric Value Industry Percentile
EBITDA Margin % 53.80 -112.44
EBIT Margin % 38.56 -92.10
EBT Margin % 32.94 -132.39
Gross Margin % 66.80 47.63
Net Profit Margin % 31.60 -133.41