Exploring The Competitive Space: Broadcom Versus Industry Peers In Semiconductors & Semiconductor Equipment

In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Broadcom AVGO vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight 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 32.60 20.98 12.82 15.3% $5.3 $6.41 4.09%
NVIDIA Corp 68.94 38.80 28.99 30.42% $10.96 $13.4 205.51%
Taiwan Semiconductor Manufacturing Co Ltd 18.82 4.90 7.59 6.46% $392.33 $296.64 -10.83%
Advanced Micro Devices Inc 1328.91 4.30 10.73 0.54% $1.13 $2.75 4.22%
Qualcomm Inc 21.32 7.17 4.37 7.05% $2.06 $4.75 -24.26%
Texas Instruments Inc 21.83 9.20 8.53 10.44% $2.34 $2.81 -13.53%
Analog Devices Inc 28.85 2.64 7.77 1.39% $1.18 $1.65 -16.36%
ARM Holdings PLC 414.88 15.65 26.31 -2.45% $-0.12 $0.76 27.94%
Microchip Technology Inc 18.78 6.65 5.29 9.66% $1.1 $1.53 8.74%
STMicroelectronics NV 9.80 2.66 2.46 7.28% $1.69 $2.11 2.55%
ON Semiconductor Corp 15.71 4.48 4.19 8.05% $0.87 $1.03 -0.54%
GLOBALFOUNDRIES Inc 22.91 2.98 4.23 2.34% $0.64 $0.53 -10.7%
United Microelectronics Corp 9.15 1.82 2.69 4.72% $29.0 $20.46 -24.3%
ASE Technology Holding Co Ltd 15.98 1.98 0.98 3.06% $28.07 $24.92 -18.27%
First Solar Inc 37.59 2.82 5.63 4.35% $0.37 $0.38 27.37%
Skyworks Solutions Inc 17.30 2.79 3.56 4.09% $0.4 $0.48 -13.37%
Lattice Semiconductor Corp 43.62 14.61 12.49 8.96% $0.07 $0.13 11.4%
Universal Display Corp 41.63 6.15 14.54 3.77% $0.06 $0.11 -12.13%
Rambus Inc 25.42 7.49 15.92 10.86% $0.12 $0.08 -6.19%
MACOM Technology Solutions Holdings Inc 66.17 6.43 9.34 2.63% $0.05 $0.09 -15.59%
Allegro Microsystems Inc 20.98 4.79 4.96 6.18% $0.09 $0.16 15.92%
Average 112.43 7.42 9.03 6.49% $23.62 $18.74 6.88%

When analyzing Broadcom, the following trends become evident:

  • The stock's Price to Earnings ratio of 32.6 is lower than the industry average by 0.29x, suggesting potential value in the eyes of market participants.

  • It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 20.98 which exceeds the industry average by 2.83x.

  • With a relatively high Price to Sales ratio of 12.82, which is 1.42x the industry average, the stock might be considered overvalued based on sales performance.

  • The company has a higher Return on Equity (ROE) of 15.3%, which is 8.81% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

  • Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.3 Billion, which is 0.22x below the industry average, potentially indicating lower profitability or financial challenges.

  • Compared to its industry, the company has lower gross profit of $6.41 Billion, which indicates 0.34x below the industry average, potentially indicating lower revenue after accounting for production costs.

  • The company's revenue growth of 4.09% is significantly below the industry average of 6.88%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.

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.

When comparing Broadcom with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:

  • Compared to its top 4 peers, Broadcom has a higher debt-to-equity ratio of 1.64, indicating a higher level of debt financing.

  • This higher debt proportion can expose the company to increased financial risk and potential challenges.

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 suggests that it is generating strong returns on shareholder equity. The low EBITDA, gross profit, and revenue growth indicate potential challenges in the company's financial performance.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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