Momentum Stock Watch: Broadcom Inc. (AVGO)

Company Profile:

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. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing merchant silicon products; embedded processors and controllers; serializer/deserializer application specific integrated circuits; optical and copper, and physical layers; and fiber optic transmitter and receiver components. The company also offers RF front end modules, filters, and power amplifiers; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; serial attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express switches; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; and optocouplers, industrial fiber optics, and motion control encoders and subsystems. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was incorporated in 2018 and is headquartered in San Jose, California.

Recent News:

On May 26, 2022, the company reported revenue of $8,103 million for the second quarter, up 23 percent from the prior year period; GAAP net income of $2,590 million, adjusted EBITDA of $5,111 million for the second quarter; $4,158 million of free cash flow from operations for the second quarter, defined as cash from operations of $4,243 million less capital expenditures of $85 million; quarterly common stock dividend of $4.10 per share.

The company also provided guidance for the third quarter of its fiscal year 2022. Based on current business trends and conditions, the outlook for the third quarter of fiscal year 2022, ending July 31, 2022, is expected to be as follows: Third quarter revenue guidance of approximately $8.4 billion; and Third quarter Adjusted EBITDA guidance of approximately 63.5 percent of projected revenue.

 

Fundamental Analysis:

Ninestocks analyzes several different financial aspects:

Price to Book Value – P/BV, a ratio used to compare book value to its current market price, to gauge whether a stock is valued properly.

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Price to Earnings – PE, the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS).

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Discounted cash flow – DCF, a valuation method used to estimate the value of an investment based on its expected future cash flows.

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Return on Assets – ROA, indicates how profitable a company is in relation to its total assets, how efficiently uses assets to generate a profit.

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Return on Equity – ROE, a measure of financial performance calculated by dividing net income by equity. a gauge of profitability and efficiency.

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Debt to Equity – evaluate financial leverage, reflects the ability of equity to cover outstanding debts in the event of a business downturn.

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Conclusion:

AVGO receives outperform rating in price to bookvalue, price to earnings, discounted cash flow, return on equnity and debt to equity. Technical indicators signal the bullish signs, as there is a bullish crossover in the Stochastic oscillator, the MACD is trying to cross back up and the RSI stands at 53.7 with positive bias. We rate Broadcom Inc. (AVGO) a BUY.

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