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In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating Broadcom (NASDAQ:AVGO) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 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 | 74.68 | 11.53 | 18.28 | 3.02% | $5.58 | $7.78 | 42.99% |
| NVIDIA Corp | 76.88 | 65.76 | 41.07 | 32.31% | $17.75 | $20.41 | 262.12% |
| Taiwan Semiconductor Manufacturing Co Ltd | 35.64 | 8.53 | 13.82 | 6.38% | $428.26 | $314.51 | 16.52% |
| Advanced Micro Devices Inc | 256.67 | 5.09 | 12.68 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 27.62 | 9.45 | 6.41 | 9.79% | $3.08 | $5.28 | 1.23% |
| ARM Holdings PLC | 628.55 | 36.07 | 58.89 | 4.35% | $0.06 | $0.89 | 46.6% |
| Texas Instruments Inc | 31.18 | 10.73 | 10.92 | 6.52% | $1.77 | $2.1 | -16.4% |
| Intel Corp | 35.66 | 1.39 | 2.65 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 54.21 | 3.27 | 11.09 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 26.53 | 7.44 | 6.63 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 100.86 | 19.49 | 22.61 | 4.45% | $0.1 | $0.25 | 1.51% |
| STMicroelectronics NV | 10.64 | 2.20 | 2.37 | 3.04% | $1.06 | $1.44 | -18.41% |
| ON Semiconductor Corp | 15 | 3.89 | 4 | 5.7% | $0.71 | $0.85 | -4.95% |
| GLOBALFOUNDRIES Inc | 33.29 | 2.63 | 4.20 | 1.19% | $0.54 | $0.39 | -15.86% |
| ASE Technology Holding Co Ltd | 24.18 | 2.88 | 1.45 | 1.94% | $23.55 | $20.87 | 1.46% |
| First Solar Inc | 23.61 | 3.49 | 6.79 | 3.48% | $0.36 | $0.35 | 44.83% |
| United Microelectronics Corp | 12.75 | 1.85 | 3.09 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 20.04 | 2.68 | 3.77 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 48.13 | 7.07 | 17.25 | 3.86% | $0.07 | $0.13 | 26.67% |
| MACOM Technology Solutions Holdings Inc | 130.13 | 7.99 | 13.12 | 1.45% | $0.04 | $0.1 | 6.98% |
| Lattice Semiconductor Corp | 38.30 | 12.04 | 12.01 | 2.15% | $0.03 | $0.1 | -23.6% |
| Cirrus Logic Inc | 27.64 | 3.98 | 4.24 | 2.48% | $0.07 | $0.19 | -0.27% |
| Average | 78.93 | 10.38 | 12.34 | 4.66% | $24.1 | $18.81 | 12.21% |
By conducting an in-depth analysis of Broadcom, we can identify the following trends:
At 74.68, the stock's Price to Earnings ratio is 0.95x less than the industry average, suggesting favorable growth potential.
With a Price to Book ratio of 11.53, which is 1.11x the industry average, Broadcom might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
The stock's relatively high Price to Sales ratio of 18.28, surpassing the industry average by 1.48x, may indicate an aspect of overvaluation in terms of sales performance.
The Return on Equity (ROE) of 3.02% is 1.64% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.58 Billion, which is 0.23x below the industry average. This potentially indicates lower profitability or financial challenges.
Compared to its industry, the company has lower gross profit of $7.78 Billion, which indicates 0.41x below the industry average, potentially indicating lower revenue after accounting for production costs.
The company's revenue growth of 42.99% is notably higher compared to the industry average of 12.21%, showcasing exceptional sales performance and strong demand for its products or services.
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
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.
In terms of the Debt-to-Equity ratio, Broadcom can be assessed by comparing it to its top 4 peers, resulting in the following observations:
Broadcom has a higher debt-to-equity ratio of 1.06 compared to its top 4 peers.
This indicates a higher level of financial risk as the company relies more heavily on borrowed funds. Investors may perceive this as a potential concern.
For Broadcom, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest the market values the company's assets and sales highly. However, the low ROE, EBITDA, and gross profit reflect lower profitability and operational efficiency. The high revenue growth indicates strong top-line performance compared to industry peers in the Semiconductors & Semiconductor Equipment sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: AVGO
