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 | 144.82 | 12.76 | 17.75 | -2.77% | $6.39 | $8.36 | 47.27% |
| NVIDIA Corp | 66.24 | 59.59 | 36.53 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 35.01 | 8.21 | 13.44 | 8.36% | $360.77 | $439.35 | 38.95% |
| Advanced Micro Devices Inc | 147.21 | 4.72 | 11.19 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 22.51 | 7.95 | 5.32 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 39.28 | 11.16 | 12.35 | 7.9% | $1.76 | $2.21 | 8.61% |
| ARM Holdings PLC | 388.65 | 29.10 | 47.12 | 4.07% | $0.23 | $0.91 | 39.11% |
| Micron Technology Inc | 154.54 | 2.66 | 4.82 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 70.87 | 3.32 | 12.11 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 95.42 | 0.85 | 1.77 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 111.15 | 20.73 | 24.10 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 31.50 | 6.62 | 6.55 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 18.54 | 3.71 | 4.41 | 4.11% | $0.58 | $0.78 | -17.15% |
| STMicroelectronics NV | 7.61 | 1.46 | 1.77 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 27.89 | 2 | 3.29 | 1.38% | $0.56 | $0.4 | -11.54% |
| ASE Technology Holding Co Ltd | 20.43 | 2.33 | 1.21 | 2.62% | $26.08 | $23.07 | 2.91% |
| First Solar Inc | 17.20 | 2.82 | 5.57 | 4.94% | $0.48 | $0.5 | 24.65% |
| United Microelectronics Corp | 11.27 | 1.67 | 2.63 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 20.26 | 2.47 | 3.62 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 45.90 | 6.65 | 16.35 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 120.79 | 7.99 | 12.83 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 40.82 | 10.95 | 12.30 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 71.1 | 9.38 | 11.39 | 4.74% | $21.42 | $25.2 | 10.79% |
Through an analysis of Broadcom, we can infer the following trends:
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At 144.82, the stock's Price to Earnings ratio significantly exceeds the industry average by 2.04x, suggesting a premium valuation relative to industry peers.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 12.76 which exceeds the industry average by 1.36x.
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The Price to Sales ratio of 17.75, which is 1.56x 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 7.51% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6.39 Billion, which is 0.3x below the industry average. This potentially indicates lower profitability or financial challenges.
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The gross profit of $8.36 Billion is 0.33x below that of its industry, suggesting potential lower revenue after accounting for production costs.
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The company's revenue growth of 47.27% exceeds the industry average of 10.79%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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 exhibits a relatively higher debt-to-equity ratio of 1.07 compared to its top 4 peers, suggesting a higher proportion of debt in the company's capital structure.
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This higher level of debt can pose greater financial risk.
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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