Broadcom Inc. is an American designer, developer, manufacturer and global supplier of a wide range of semiconductor and infrastructure software products. Broadcom's product offerings serve the data center, networking, software, broadband, wireless, and storage and industrial markets.
On a general note Broadcom is a technology company that designs and develops infrastructure software. Its mainframe software solutions include solutions for the IBM.
American semiconductor manufacturer Broadcom looks very attractive due to the following factors:
1) Target price from JPM - $ 570.
Below Fair Value: AVGO ($470.77) is trading below our estimate of fair value ($570)
2) Dividends are paid at 3.1%
Notable Dividend: AVGO's dividend (3.06%) is higher than the bottom 25% of dividend payers in the US market (1.26%).
PE vs Industry: AVGO is poor value based on its PE Ratio (52x) compared to the US Semiconductor industry average (38x)
📖 Financial indicators:
Earnings vs Market: AVGO's earnings (23.8% per year) are forecast to grow faster than the US market (19.2% per year).
Future ROE: AVGO's Return on Equity is forecast to be very high in 3 years time (47%).
Earnings Trend: AVGO's earnings have grown significantly by 20.8% per year over the past 5 years.
Accelerating Growth: AVGO's earnings growth over the past year (44.5%) exceeds its 5-year average (20.8% per year).
Short Term Liabilities: AVGO's short term assets ($14.3B) exceed its short term liabilities ($6.7B).
Long Term Liabilities: AVGO's short term assets ($14.3B) do not cover its long term liabilities ($46.3B).
Reducing Debt: AVGO's debt to equity ratio has increased from 75.9% to 174.5% over the past 5 years.
Debt Coverage: AVGO's debt is well covered by operating cash flow (30.7%)
Below Fair Value: AVGO ($475.28) is trading below our estimate of fair value ($600.21)
OTB Global Investments
London, 23 March 2021