Broadcom Inc. Fundamental Analysis (NASDAQ: AVGO)
Broadcom Inc. (NASDAQ: AVGO) shows strong financial fundamentals with a PE ratio of 45.11, profit margin of 42.94%, and ROE of 43.91%. The company generates $88.9B in annual revenue with strong year-over-year growth of 23.87%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 91.4/100 based on profitability, valuation, growth, and balance sheet metrics. The A grade reflects excellent fundamentals and strong overall stability.
Fundamental Health Score
We analyze AVGO's fundamental strength across five key dimensions:
Efficiency Score
ExcellentAVGO demonstrates superior asset utilization.
Valuation Score
ModerateAVGO shows balanced valuation metrics.
Growth Score
ModerateAVGO shows steady but slowing expansion.
Financial Health Score
ExcellentAVGO maintains a strong and stable balance sheet.
Profitability Score
ExcellentAVGO achieves industry-leading margins.
Key Financial Metrics
Is AVGO Expensive or Cheap?
P/E Ratio
AVGO trades at 45.11 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, AVGO's PEG of 0.45 indicates potential undervaluation.
Price to Book
The market values Broadcom Inc. at 17.38 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 32.42 times EBITDA. This signals the market has high growth expectations.
How Well Does AVGO Make Money?
Net Profit Margin
For every $100 in sales, Broadcom Inc. keeps $42.94 as profit after all expenses.
Operating Margin
Core operations generate 48.27 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $43.91 in profit for every $100 of shareholder equity.
ROA
Broadcom Inc. generates $20.34 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Broadcom Inc. generates strong operating cash flow of $40.58B, reflecting robust business health.
Free Cash Flow
Broadcom Inc. generates strong free cash flow of $39.33B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $8.27 in free cash annually.
FCF Yield
AVGO converts 2.28% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
45.11
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.45
vs 25 benchmark
P/B Ratio
Price to book value ratio
17.38
vs 25 benchmark
P/S Ratio
Price to sales ratio
19.41
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.60
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.50
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.44
vs 25 benchmark
ROA
Return on assets percentage
0.20
vs 25 benchmark
ROCE
Return on capital employed
0.26
vs 25 benchmark
How AVGO Stacks Against Its Sector Peers
| Metric | AVGO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 45.11 | 34.25 | Worse (Expensive) |
| ROE | 43.91% | 771.00% | Weak |
| Net Margin | 42.94% | -3147.00% (disorted) | Strong |
| Debt/Equity | 0.60 | 0.59 | Neutral |
| Current Ratio | 2.50 | 6.19 | Strong Liquidity |
| ROA | 20.34% | 332.00% | Weak |
AVGO outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Broadcom Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
128.17%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
566.55%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
94.78%
Industry Style: Growth, Innovation, High Beta
High Growth