In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Broadcom ( AVGO ) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within the industry.
Broadcom ( AVGO ) 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 ( AVGO ) 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 |
|---|---|---|---|---|---|---|---|
| 49.74 | 8.83 | 15.03 | 2.81% | 34.17% | |||
| NVIDIA Corp | 73.56 | 51.05 | 35.93 | 32.23% | 265.28% | ||
| Advanced Micro Devices Inc | 302.26 | 4.63 | 11.48 | 1.2% | 10.16% | ||
| Qualcomm Inc | 24.14 | 8.19 | 5.24 | 12.4% | 4.99% | ||
| Texas Instruments Inc | 27.93 | 9.61 | 9.78 | 6.52% | -16.4% | ||
| Intel Corp | 32.33 | 1.26 | 2.40 | -0.36% | -17.41% | ||
| ARM Holdings PLC | 1248.68 | 21.21 | 36.13 | 1.78% | 13.81% | ||
| Analog Devices Inc | 36.41 | 2.84 | 8.86 | 1.3% | -22.68% | ||
| Microchip Technology Inc | 21.77 | 7.11 | 6 | 5.97% | -18.6% | ||
| STMicroelectronics NV | 10.56 | 2.17 | 2.35 | 3.04% | -18.41% | ||
| Monolithic Power Systems Inc | 77.59 | 16.13 | 18.20 | 4.85% | -1.3% | ||
| ON Semiconductor Corp | 14.45 | 3.75 | 3.85 | 7.37% | -4.06% | ||
| GLOBALFOUNDRIES Inc | 26.67 | 2.43 | 3.67 | 2.53% | 0.11% | ||
| ASE Technology Holding Co Ltd | 20.96 | 2.50 | 1.25 | 1.94% | 1.46% | ||
| United Microelectronics Corp | 10.52 | 1.85 | 2.82 | 3.43% | -18.98% | ||
| First Solar Inc | 23.36 | 2.89 | 5.85 | 5.38% | 15.58% | ||
| Skyworks Solutions Inc | 19.12 | 2.78 | 3.73 | 3.76% | -9.61% | ||
| Lattice Semiconductor Corp | 41.55 | 15.28 | 14.58 | 14.98% | -3.05% | ||
| Universal Display Corp | 38.21 | 5.31 | 13.39 | 4.36% | -6.34% | ||
| MACOM Technology Solutions Holdings Inc | 100 | 7.32 | 11.93 | 1.27% | -12.75% | ||
| Rambus Inc | 20.09 | 6.33 | 14.54 | 5.87% | -0.12% | ||
| Average | 108.51 | 8.73 | 10.6 | 5.99% | 8.08% |
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Through a thorough examination of Broadcom ( AVGO ), we can discern the following trends:
The Price to Earnings ratio of 49.74 is 0.46x lower than the industry average, indicating potential undervaluation for the stock.
The elevated Price to Book ratio of 8.83 relative to the industry average by 1.01x suggests company might be overvalued based on its book value.
The Price to Sales ratio of 15.03, which is 1.42x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 2.81% that is 3.18% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.61 Billion, which is 1.23x above the industry average, implying stronger profitability and robust cash flow generation.
The company has higher gross profit of $7.38 Billion, which indicates 1.86x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company's revenue growth of 34.17% is notably higher compared to the industry average of 8.08%, showcasing exceptional sales performance and strong demand for its products or services.
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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 evaluating Broadcom ( AVGO ) alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
Among its top 4 peers, Broadcom ( AVGO ) has a higher debt-to-equity ratio of 1.08.
This implies a greater reliance on debt financing, which can expose the company to higher financial risk and potential challenges.
The PE, PB, and PS ratios for Broadcom ( AVGO ) indicate that it may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, its low ROE suggests that the company may not be utilizing its assets efficiently. On the other hand, Broadcom's ( AVGO ) high EBITDA, gross profit, and revenue growth demonstrate strong operational performance and growth potential within the industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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