In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Broadcom AVGO in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 37.69 | 24.26 | 14.82 | 15.3% | $5.3 | $6.41 | 4.09% |
| NVIDIA Corp | 91.47 | 51.48 | 38.47 | 30.42% | $10.96 | $13.4 | 205.51% |
| Advanced Micro Devices Inc | 328.74 | 5.04 | 12.48 | 1.2% | $1.22 | $2.91 | 10.16% |
| Intel Corp | 106.97 | 1.71 | 3.32 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 20.54 | 6.97 | 4.46 | 12.4% | $3.58 | $5.62 | 4.99% |
| Texas Instruments Inc | 22.48 | 8.55 | 8.31 | 8.14% | $1.98 | $2.43 | -12.7% |
| Analog Devices Inc | 29.40 | 2.68 | 7.92 | 1.39% | $1.18 | $1.65 | -16.36% |
| ARM Holdings PLC | 417.27 | 15.74 | 26.47 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 19.96 | 6.52 | 5.50 | 9.66% | $0.75 | $1.12 | 8.74% |
| STMicroelectronics NV | 10.03 | 2.41 | 2.44 | 6.69% | $1.43 | $1.95 | -3.36% |
| ON Semiconductor Corp | 15.86 | 4.26 | 4.20 | 8.05% | $0.87 | $1.03 | -0.54% |
| GLOBALFOUNDRIES Inc | 20.30 | 2.64 | 3.75 | 2.34% | $0.64 | $0.53 | -10.7% |
| ASE Technology Holding Co Ltd | 19.90 | 2.07 | 1.07 | 3.06% | $28.07 | $24.92 | -18.27% |
| United Microelectronics Corp | 8.65 | 1.72 | 2.55 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 17.87 | 2.59 | 3.48 | 3.76% | $0.37 | $0.51 | -9.61% |
| First Solar Inc | 31.63 | 2.37 | 4.74 | 4.35% | $0.37 | $0.38 | 27.37% |
| Lattice Semiconductor Corp | 41.34 | 13.85 | 11.84 | 8.96% | $0.07 | $0.13 | 11.4% |
| Universal Display Corp | 39.42 | 5.82 | 13.77 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 26.09 | 7.69 | 16.34 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 78.13 | 5.72 | 9.32 | 2.63% | $0.03 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 25.93 | 5.02 | 5.35 | 6.18% | $0.06 | $0.13 | 15.92% |
| Average | 68.6 | 7.74 | 9.29 | 6.43% | $4.31 | $4.26 | 9.6% |
Through a thorough examination of Broadcom, we can discern the following trends:
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The stock's Price to Earnings ratio of 37.69 is lower than the industry average by 0.55x, suggesting potential value in the eyes of market participants.
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The elevated Price to Book ratio of 24.26 relative to the industry average by 3.13x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 14.82, which is 1.6x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 15.3% that is 8.87% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.3 Billion is 1.23x above the industry average, highlighting stronger profitability and robust cash flow generation.
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The gross profit of $6.41 Billion is 1.5x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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With a revenue growth of 4.09%, which is much lower than the industry average of 9.6%, the company is experiencing a notable slowdown in sales expansion.
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.
By analyzing Broadcom in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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Broadcom has a higher debt-to-equity ratio of 1.64 compared to its top 4 peers.
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This indicates a higher level of financial risk as the company relies more heavily on borrowed funds. Investors may perceive this as a potential concern.
Key Takeaways
Broadcom's low PE ratio suggests that it is undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. The high PB and PS ratios indicate that the company's stock price may be overvalued relative to its book value and sales. On the other hand, Broadcom's high ROE, EBITDA, gross profit, and low revenue growth suggest that the company is performing well in terms of profitability and efficiency, but its revenue growth is relatively slow compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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