In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating Broadcom AVGO against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 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 | 142.21 | 12.52 | 17.43 | -2.77% | $6.39 | $8.36 | 47.27% |
| NVIDIA Corp | 61.70 | 55.51 | 34.03 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.33 | 8.23 | 12.80 | 6.67% | $474.12 | $358.12 | 40.07% |
| Advanced Micro Devices Inc | 186.52 | 4.49 | 11.03 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 22.27 | 7.87 | 5.27 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 34.63 | 10.60 | 11.39 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 372.39 | 27.88 | 45.15 | 4.07% | $0.23 | $0.91 | 39.11% |
| Micron Technology Inc | 149.07 | 2.56 | 4.65 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 68.04 | 3.19 | 11.62 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 94.42 | 0.84 | 1.75 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 106.51 | 19.86 | 23.09 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 29.98 | 6.30 | 6.24 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 15.79 | 3.56 | 3.91 | 4.11% | $0.58 | $0.78 | -17.15% |
| STMicroelectronics NV | 7.07 | 1.36 | 1.65 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 27.58 | 1.97 | 3.25 | 1.38% | $0.56 | $0.4 | -11.54% |
| ASE Technology Holding Co Ltd | 20.53 | 2.34 | 1.22 | 2.62% | $26.08 | $23.07 | 2.91% |
| First Solar Inc | 18.03 | 2.98 | 5.77 | 4.94% | $0.48 | $0.5 | 24.65% |
| United Microelectronics Corp | 12.12 | 1.80 | 2.83 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 20.36 | 2.48 | 3.64 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 43.34 | 6.28 | 15.44 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 114.58 | 7.57 | 12.17 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 36 | 9.65 | 10.85 | 3.28% | $0.04 | $0.08 | -34.72% |
| Cirrus Logic Inc | 23.05 | 3.58 | 3.75 | 2.3% | $0.07 | $0.19 | 17.98% |
| Average | 68.06 | 8.68 | 10.52 | 4.49% | $25.6 | $20.37 | 10.06% |
By analyzing Broadcom, we can infer the following trends:
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Notably, the current Price to Earnings ratio for this stock, 142.21, is 2.09x above the industry norm, reflecting a higher valuation relative to the industry.
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The elevated Price to Book ratio of 12.52 relative to the industry average by 1.44x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 17.43, which is 1.66x 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 Return on Equity (ROE) of -2.77% is 7.26% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6.39 Billion, which is 0.25x below the industry average, potentially indicating lower profitability or financial challenges.
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The company has lower gross profit of $8.36 Billion, which indicates 0.41x below the industry average. This potentially indicates lower revenue after accounting for production costs.
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The company is experiencing remarkable revenue growth, with a rate of 47.27%, outperforming the industry average of 10.06%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 terms of the Debt-to-Equity ratio, Broadcom can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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Among its top 4 peers, Broadcom has a higher debt-to-equity ratio of 1.07.
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This implies a greater reliance on debt financing, which can expose the company to higher financial risk and potential challenges.
Key Takeaways
For Broadcom, the PE, PB, and PS ratios are all high compared to industry peers, indicating the stock may be overvalued. In contrast, the low ROE, EBITDA, and gross profit suggest lower profitability and operational efficiency relative to competitors. However, the high revenue growth rate could be a positive factor for future performance in the Semiconductors & Semiconductor Equipment industry.
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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