27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Broadcom (NASDAQ:AVGO) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company's performance within the industry.
Broadcom Background
Broadcom is the sixth-largest semiconductor company globally and has expanded into various software businesses, with over $30 billion in annual revenue. It sells 17 core semiconductor product lines across wireless, networking, broadband, storage, and industrial markets. It is primarily a fabless designer but holds some manufacturing in-house, like for its best-of-breed FBAR filters that sell into the Apple iPhone. In software, it sells virtualization, infrastructure, and security software to large enterprises, financial institutions, and governments.Broadcom is the product of consolidation. Its businesses are an amalgamation of former companies like legacy Broadcom and Avago Technologies in chips, as well as Brocade, CA Technologies, and Symantec in software.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Broadcom Inc | 50.17 | 8.90 | 15.16 | 2.81% | $4.61 | $7.38 | 34.17% |
| NVIDIA Corp | 75.75 | 52.57 | 37 | 32.23% | $14.56 | $16.79 | 265.28% |
| Advanced Micro Devices Inc | 345.91 | 5.30 | 13.14 | 1.2% | $1.22 | $2.91 | 10.16% |
| Qualcomm Inc | 24.50 | 8.31 | 5.32 | 12.4% | $3.58 | $5.62 | 4.99% |
| Intel Corp | 111.30 | 1.78 | 3.46 | 2.57% | $5.57 | $7.05 | 9.71% |
| Texas Instruments Inc | 24.49 | 9.33 | 9.05 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1534.97 | 26.07 | 44.41 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 35.10 | 2.74 | 8.54 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 20.97 | 6.85 | 5.78 | 5.97% | $0.75 | $1.12 | -18.6% |
| STMicroelectronics NV | 9.72 | 2.33 | 2.37 | 6.69% | $1.5 | $1.95 | -3.21% |
| Monolithic Power Systems Inc | 76.31 | 15.87 | 17.90 | 4.85% | $0.12 | $0.25 | -1.3% |
| ON Semiconductor Corp | 15.10 | 4.05 | 4 | 7.37% | $0.79 | $0.94 | -4.06% |
| GLOBALFOUNDRIES Inc | 28.30 | 2.58 | 3.90 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 24.15 | 2.51 | 1.30 | 3.17% | $28.28 | $25.76 | 4.16% |
| United Microelectronics Corp | 9.36 | 1.87 | 2.76 | 4.72% | $29.0 | $20.46 | -24.3% |
| First Solar Inc | 22.22 | 2.75 | 5.56 | 5.38% | $0.47 | $0.5 | 15.58% |
| Skyworks Solutions Inc | 18.98 | 2.75 | 3.70 | 3.76% | $0.37 | $0.51 | -9.61% |
| Lattice Semiconductor Corp | 42.16 | 15.50 | 14.79 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 39.23 | 5.44 | 13.74 | 4.36% | $0.08 | $0.12 | -6.34% |
| MACOM Technology Solutions Holdings Inc | 93.87 | 6.87 | 11.20 | 1.27% | $0.03 | $0.09 | -12.75% |
| Rambus Inc | 20.67 | 6.51 | 14.97 | 5.87% | $0.07 | $0.1 | -0.12% |
| Average | 128.65 | 9.1 | 11.14 | 6.53% | $4.52 | $4.48 | 10.25% |
Upon a comprehensive analysis of Broadcom, the following trends can be discerned:
With a Price to Earnings ratio of 50.17, which is 0.39x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
The current Price to Book ratio of 8.9, which is 0.98x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
The Price to Sales ratio of 15.16, which is 1.36x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The Return on Equity (ROE) of 2.81% is 3.72% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.61 Billion, which is 1.02x above the industry average, indicating stronger profitability and robust cash flow generation.
The company has higher gross profit of $7.38 Billion, which indicates 1.65x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company's revenue growth of 34.17% is notably higher compared to the industry average of 10.25%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In light of the Debt-to-Equity ratio, a comparison between Broadcom and its top 4 peers reveals the following information:
Compared to its top 4 peers, Broadcom has a higher debt-to-equity ratio of 1.08, indicating a higher level of debt financing.
This higher debt proportion can expose the company to increased financial risk and potential challenges.
Key Takeaways
The low P/E and P/B ratios of Broadcom suggest that the company's stock price is relatively undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/S ratio indicates that investors are willing to pay a premium for Broadcom's revenue. In terms of profitability, Broadcom's low ROE may raise concerns, but its high EBITDA, gross profit, and revenue growth reflect strong financial performance within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
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