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Broadcom Inc.’s (AVGO) strategic acquisitions and partnerships with industry leaders undoubtedly lay a solid foundation for significant long-term growth. But with earnings on the horizon, is it wise to invest in AVGO stock? Let’s find out if the company’s fundamentals support this potential…
Broadcom Corporation (AVGO) will announce its first quarter 2024 financial results on March 7th. The forecast is for sales to reach his $11.75 billion, an increase of 31.8% year over year. Furthermore, analysts expect the company’s EPS to increase slightly from the year-ago quarter to $10.39.
AVGO’s acquisition of VMware, which was completed on November 22, 2023, is an important step toward increasing our investment in VMware Cloud Foundation. AVGO is ready to power its cloud and edge services and meet modernization demands with VMware’s robust suite of services, including Tanzu, which accelerates application deployment.
AVGO President and CEO Hock Tan highlighted the revolutionary impact of the acquisition in the latest financial results. “The VMware acquisition is transformational. In fiscal 2024, we expect semiconductors to maintain mid-to-high single-digit revenue growth, with VMware contributing to consolidated revenue of $50 billion, Adjusted EBITDA will reach $30 billion.”
In addition, joint verification by SoftBank, NEC Corporation, and VMware under the ownership of AVGO; Radio Access Network (RAN) Virtualizationenables migration from traditional RAN systems to vRAN systems. This transition streamlines network operations, increases efficiency and scalability, and aligns well with his AVGO strategic goals of smart and efficient operations.
By adopting an O-RAN architecture and optimizing it for the communications cloud, AVGO can benefit from open and integrated operations throughout the network lifecycle. This approach increases operational efficiency, provides scalability and flexibility, and further solidifies his AVGO’s position as a leader in providing innovative solutions for communications infrastructure.
AVGO stock has increased 60.8% over the past six months and 121.6% over the past year, closing at $1,402.26.
The following are AVGO’s financial aspects that may impact price performance in the short term.
sound finances
AVGO’s non-GAAP net revenue for the fourth quarter of fiscal 2023 ended October 29, 2023 increased 4.1% from the prior year period to $9.3 billion.the Adjusted EBITDA Sales totaled $6.05 billion, an increase of 5.7% from the same period last year.
Additionally, the company’s non-GAAP net income and non-GAAP earnings per common share were $4.81 billion and $11.06, respectively, an increase of 5.9% and 5.8% year over year.
Mixed growth record
Over the past three years, AVGO’s revenue and EBITDA have grown at a CAGR of 14.5% and 21.5%, respectively. Net income and EPS grew at a CAGR of 68.2% and 73.4%, respectively. However, the company’s total assets decreased at a CAGR of 1.4% over the same period.
optimistic analyst forecasts
Consensus revenue estimates for the fiscal year ending October 2024 are $49.84 billion, representing a 39.1% year-over-year increase. Similarly, the company’s EPS is expected to increase by 10.6% year-over-year to reach $46.72.
Looking ahead, analysts expect sales to increase 11% to $55.34 billion for the fiscal year ending October 2025. Similarly, next year’s EPS is expected to grow 19.6% YoY, settling at $55.90.
solid profitability
The company’s trailing 12-month gross profit margin and trailing 12-month EBITDA margin were 74.11% and 56.40%, which were 51.6% and 494.3% higher than the industry average of 48.87% and 9.49%, respectively.
Additionally, the company’s trailing 12-month leveraged FCF margin of 37.56% is 315.9% higher than the industry average of 9.03%. Similarly, his net profit margin for the trailing twelve months was 39.31%, compared to the industry average of 2.56%.
expanded assessment
In terms of non-GAAP forward P/E, AVGO is trading at 29.86x, 18.3% above the industry average of 25.24x. The company’s future EV/Sales is 13.52x, which is 361.2% higher than the industry average of 2.93x.
Furthermore, the company’s Forward EV/EBITDA and Forward Price/Sales of 22.64x and 13.01x are 46.6% and 336.1% higher than the industry average of 15.45x and 2.98x, respectively.
POWR Ratings Show Mixed Outlook
AVGO’s outlook is power rating. The stock has an overall rating of C, which equates to Neutral according to our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to the best degree.
Our proprietary rating system also evaluates each stock based on eight different categories. His A grade for AVGO Quality highlights its solid profitability and positively reflects its financial health. However, the stock has a C grade for stability, reflecting a 24-month beta of 1.21, suggesting some volatility in its share price performance.
Additionally, AVGO holds a D grade for Value, which is consistent with a strong rating compared to its peers. This stock is ranked #22 out of 90 stocks. Semiconductor & wireless chips industry. click here Access AVGO’s growth, momentum, and sentiment ratings.
conclusion
AVGO’s acquisition of VMware and partnerships with industry giants such as SoftBank and NEC highlight AVGO’s focus on advancing network infrastructure technology. These strategic initiatives position AVGO to provide comprehensive solutions to meet the dynamic demands of the communications sector and drive market growth and competitiveness.
Despite this promising long-term outlook, the company’s current valuation exceeds industry norms, coupled with volatility, meaning it may be beneficial to wait for a better entry point into AVGO. suggests.
How does Broadcom Inc. (AVGO) stack up against its competitors?
AVGO’s overall grade is C, which equates to a Neutral rating, but these A (Strong Buy) and B (Buy) rated stocks are Semiconductor & wireless chips Industry: Qualcomm Corporation (QCOM), ChipMOS TECHNOLOGIES INC. (Imos) and Everspin Technologies, Inc. (MRAM). For a deeper dive into semiconductor and wireless chip stocks, click here.
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AVGO stock was unchanged in premarket trading Tuesday. Year-to-date, AVGO has increased his 25.62%. In comparison, the benchmark S&P 500 index rose 7.78% in the same period.
About the author: Aanchal Sugandh
Aanchal’s passion for financial markets drives his work as an investment analyst and journalist. She has a bachelor’s degree in finance and is in the CFA program. She is adept at using fundamental analysis skills to assess the long-term prospects of stocks. Her goal is to help investors build portfolios that deliver sustainable returns.
post Pre-earnings warning: Is AVGO stock poised for rapid growth? It first appeared stocknews.com