Now trading at a price of $867.07, Broadcom has moved 1.6% so far today.
Broadcom returned gains of 92.0% last year, with its stock price reaching a high of $925.91 and a low of $441.36. Over the same period, the stock outperformed the S&P 500 index by 80.0%. More recently, the company's 50-day average price was $854.12. Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. Based in San Jose, CA, the large-cap Technology company has 20,000 full time employees. Broadcom has offered a 2.2% dividend yield over the last 12 months.
The Company Enjoys Exceptional EPS Growth:
| 2017-12-13 | 2018-12-21 | 2019-12-20 | 2020-12-18 | 2021-12-17 | 2022-12-09 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $17,636 | $20,848 | $22,597 | $23,888 | $27,450 | $33,203 |
| Gross Margins | 48.0% | 51.0% | 55.0% | 56.0% | 61.0% | 67.0% |
| Operating Margins | 15% | 26% | 18% | 18% | 32% | 43% |
| Net Margins | 10.0% | 59.0% | 12.0% | 12.0% | 25.0% | 35.0% |
| Net Income (MM) | $1,692 | $12,259 | $2,724 | $2,960 | $6,736 | $11,495 |
| Net Interest Expense (MM) | -$454 | -$628 | -$1,444 | -$1,777 | -$1,885 | -$1,737 |
| Depreciation & Amort. (MM) | -$4,737 | -$4,081 | -$5,808 | -$570 | -$539 | -$529 |
| Earnings Per Share | $4.02 | $28.44 | $6.43 | $6.33 | $15.29 | $26.53 |
| EPS Growth | n/a | 607.46% | -77.39% | -1.56% | 141.55% | 73.51% |
| Diluted Shares (MM) | 421 | 431 | 419 | 421 | 421 | 423 |
| Free Cash Flow (MM) | $7,179 | $9,276 | $10,041 | $12,524 | $14,207 | $17,160 |
| Capital Expenditures (MM) | -$628 | -$396 | -$344 | -$463 | -$443 | -$424 |
| Net Current Assets (MM) | -$15,409 | -$14,360 | -$32,606 | -$40,137 | -$33,995 | -$32,036 |
| Long Term Debt (MM) | $17,431 | $17,493 | $30,011 | $40,235 | $39,440 | $39,075 |
| Net Debt / EBITDA | 0.86 | 1.4 | 2.78 | 6.99 | 2.99 | 1.83 |
Broadcom has exceptional EPS growth and a pattern of improving cash flows. Additionally, the company's financial statements display an excellent current ratio and healthy leverage. However, the firm has slimmer gross margins than its peers. Finally, we note that Broadcom has weak revenue growth and a flat capital expenditure trend and average net margins with a positive growth rate.
Broadcom's Valuation Is in Line With Its Sector Averages:
Broadcom has a trailing twelve month P/E ratio of 26.3, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $43.24, the company has a forward P/E ratio of 19.8. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 37.0%. On this basis, Broadcom's PEG ratio is 0.71. Using instead the 11.0% weighted average of Broadcom's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 2.38, which suggests that its shares may be overpriced. Furthermore, Broadcom is likely overvalued compared to the book value of its equity, since its P/B ratio of 14.64 is higher than the sector average of 6.23. The company's shares are currently trading 384.4% above their Graham number. Ultimately, Broadcom's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
Broadcom Has an Average Rating of Buy:
The 23 analysts following Broadcom have set target prices ranging from $900.0 to $1050.0 per share, for an average of $981.91 with a buy rating. As of April 2023, the company is trading -13.0% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Broadcom has a very low short interest because 1.9% of the company's shares are sold short. Institutions own 83.6% of the company's shares, and the insider ownership rate stands at 2.27%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $35,143,782,152.
