In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. 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 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 | 45.98 | 8.16 | 13.90 | 2.81% | $4.61 | $7.38 | 34.17% |
| NVIDIA Corp | 74.14 | 51.45 | 36.21 | 32.23% | $14.56 | $16.79 | 265.28% |
| Advanced Micro Devices Inc | 359.72 | 5.51 | 13.66 | 1.2% | $1.22 | $2.91 | 10.16% |
| Qualcomm Inc | 23.81 | 8.08 | 5.17 | 12.4% | $3.58 | $5.62 | 4.99% |
| Intel Corp | 106.78 | 1.71 | 3.32 | 2.57% | $5.57 | $7.05 | 9.71% |
| Texas Instruments Inc | 23.93 | 9.11 | 8.85 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1569.69 | 26.66 | 45.41 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 34.14 | 2.67 | 8.31 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 20.58 | 6.72 | 5.67 | 5.97% | $0.75 | $1.12 | -18.6% |
| STMicroelectronics NV | 10 | 2.40 | 2.44 | 6.69% | $1.5 | $1.95 | -3.21% |
| Monolithic Power Systems Inc | 76.96 | 16 | 18.05 | 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 | 28.46 | 2.60 | 3.92 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 24.24 | 2.52 | 1.30 | 3.17% | $28.28 | $25.76 | 4.16% |
| United Microelectronics Corp | 9.19 | 1.83 | 2.71 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 18.28 | 2.65 | 3.56 | 3.76% | $0.37 | $0.51 | -9.61% |
| First Solar Inc | 19.32 | 2.39 | 4.84 | 5.38% | $0.47 | $0.5 | 15.58% |
| Lattice Semiconductor Corp | 40.97 | 15.07 | 14.37 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 37.65 | 5.22 | 13.19 | 4.36% | $0.08 | $0.12 | -6.34% |
| Rambus Inc | 20.10 | 6.33 | 14.55 | 5.87% | $0.07 | $0.1 | -0.12% |
| MACOM Technology Solutions Holdings Inc | 87.62 | 6.41 | 10.45 | 1.27% | $0.03 | $0.09 | -12.75% |
| Allegro Microsystems Inc | 24.37 | 4.73 | 5.03 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 125.0 | 8.77 | 10.71 | 6.36% | $4.31 | $4.27 | 9.88% |
When conducting a detailed analysis of Broadcom, the following trends become clear:
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With a Price to Earnings ratio of 45.98, which is 0.37x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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With a Price to Book ratio of 8.16, significantly falling below the industry average by 0.93x, it suggests undervaluation and the possibility of untapped growth prospects.
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The Price to Sales ratio of 13.9, which is 1.3x 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 lower Return on Equity (ROE) of 2.81%, which is 3.55% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.61 Billion, which is 1.07x above the industry average, implying stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $7.38 Billion, which indicates 1.73x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 34.17% is notably higher compared to the industry average of 9.88%, 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 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.
When comparing Broadcom with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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Broadcom exhibits a higher debt-to-equity ratio of 1.08 compared to its top 4 peers.
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This suggests a higher level of debt in the company's capital structure, which can increase financial risk and impact the company's overall stability.
Key Takeaways
The low PE and PB ratios suggest Broadcom is undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high PS ratio indicates a potential overvaluation based on revenue. The low ROE and high EBITDA and gross profit imply efficient operations and strong financial performance. The high revenue growth further highlights Broadcom's competitive position within the 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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