In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Broadcom AVGO against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim to provide 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 iPhone. It counts Apple as a large customer at roughly one fifth of sales. In software, it sells infrastructure and security software to large 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 | 29.47 | 17.90 | 11.29 | 14.98% | $4.91 | $6.16 | 4.87% |
| NVIDIA Corp | 116.75 | 43.41 | 36.85 | 23.79% | $7.41 | $9.46 | 101.48% |
| Advanced Micro Devices Inc | 1078.09 | 3.49 | 8.71 | 0.54% | $1.13 | $2.75 | 4.22% |
| Qualcomm Inc | 19.05 | 6.41 | 3.90 | 7.05% | $2.06 | $4.75 | -24.26% |
| Texas Instruments Inc | 19.07 | 8.04 | 7.45 | 10.44% | $2.34 | $2.81 | -13.53% |
| Analog Devices Inc | 23.44 | 2.39 | 6.84 | 2.44% | $1.53 | $1.96 | -1.07% |
| ARM Holdings PLC | 297.72 | 11.23 | 18.88 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 17.01 | 6.02 | 4.79 | 9.66% | $1.1 | $1.53 | 8.74% |
| STMicroelectronics NV | 9 | 2.45 | 2.26 | 7.28% | $1.69 | $2.11 | 2.55% |
| ON Semiconductor Corp | 13.58 | 3.88 | 3.63 | 8.05% | $0.87 | $1.03 | -0.54% |
| GLOBALFOUNDRIES Inc | 20.46 | 2.67 | 3.78 | 2.34% | $0.64 | $0.53 | -10.7% |
| United Microelectronics Corp | 7.69 | 1.89 | 2.43 | 4.72% | $29.0 | $20.46 | -24.3% |
| ASE Technology Holding Co Ltd | 15.48 | 1.92 | 0.95 | 3.06% | $28.07 | $24.92 | -18.27% |
| Skyworks Solutions Inc | 14.69 | 2.36 | 3.02 | 4.09% | $0.4 | $0.48 | 13.78% |
| First Solar Inc | 30.30 | 2.27 | 4.54 | 4.35% | $0.37 | $0.38 | 27.37% |
| Lattice Semiconductor Corp | 37.47 | 12.55 | 10.73 | 8.96% | $0.06 | $0.13 | 1.1% |
| Universal Display Corp | 36.12 | 5.33 | 12.62 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 23.93 | 7.05 | 14.99 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 60.23 | 5.78 | 8.50 | 2.63% | $0.03 | $0.09 | 1.25% |
| Allegro Microsystems Inc | 19.86 | 4.53 | 4.69 | 6.18% | $0.09 | $0.16 | 15.92% |
| Average | 97.89 | 7.04 | 8.4 | 6.2% | $4.04 | $3.92 | 4.91% |
When analyzing Broadcom, the following trends become evident:
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A Price to Earnings ratio of 29.47 significantly below the industry average by 0.3x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 17.9, which is 2.54x the industry average, Broadcom might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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The Price to Sales ratio of 11.29, which is 1.34x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a higher Return on Equity (ROE) of 14.98%, which is 8.78% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.91 Billion, which is 1.22x above the industry average, implying stronger profitability and robust cash flow generation.
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The company has higher gross profit of $6.16 Billion, which indicates 1.57x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 4.87% is significantly lower compared to the industry average of 4.91%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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:
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Broadcom has a relatively higher debt-to-equity ratio of 1.78 compared to its top 4 peers.
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This could indicate a higher financial risk as the company is more reliant on borrowed funds, and investors may perceive it 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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