_edited.png)
RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Broadcom Inc. (XNAS:AVGO) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
AVGO
Name:
Broadcom Inc. (XNAS:AVGO)
Sector:
3.39B
Industry:
Semiconductors
CEO:
Mr. Hock Tan
Total Employees:
20,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -133.31% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF BROADCOM INC.(AVGO) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SEMICONDUCTORS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
500.22
One Month Price Target:
$503.34
Six Month Price Target :
$518.94
Likely Price in One Year's Time:
Ticker:
$537.66
Likely Trading Range Today Under (Normal Volatility)
$498.55
Price Upper limit ($) :
$502.87
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$474.6
This week:
$442.93
This month :
$385.65
Other Primary facts
Market Cap:
201.18B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
403.82M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
15.83%
-19.91%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$619.01
$563.90
$381.43
$436.54
Medium risk (<10%) entry points
Buy Call
Sell Call
$545.97
Buy Put:
Sell Put:
$534.20
$454.32
$466.24
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
AVGO
Sharpe Ratio:
3.50%
Comparison:
AVGO, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 13.16% higher than the industry
& ratio is 53.72% higher than the market/S&P 500 average
Average Returns/Yield of
AVGO
Daily returns:
0.10%
Weekly returns:
0.49%
Monthly returns:
1.96%
Yearly returns:
31.95%
Comparison of returns:
Average annual returns/yield (last 3 years) is -26.45% below industry average
Classification:
AVGO, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.68
Statistical test of Returns:
AVGO has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.54%
Weekly Volatility:
5.68%
Monthly Volatility:
11.37%
Yearly Volatility:
39.37%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.56%
Volatility in last five trading days has been -38.46% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.12%
Weekly VaR:
-11.45%
Monthly VaR:
-22.90%
How Much Can the price of
AVGO
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-19%
Worst case (decline):
-79.34%
This translates to price declining to:
$404.53
This translates to price declining to:
$103.32
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
AVGO is a 61.66% riskier investment compared to the market/S&P 500 & is 38.50% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -28.39% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
AVGO
Beta in relation to market/S&P 500--1.11
Expected beta in 1 year's time:
0.844
Expected beta in 3 year's time:
1.194
Unlevered (debt free) Beta:
0.424
Beta in relation to Nasdaq (XNAS):
1.148
Beta in relation to all global stocks::
0.874
Beta Comparison & Analysis
Beta of competitors/peers::
1.22
Beta is -8.75% lower than peers
Average Industry Beta:
1.41
Beta is -21.03% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
2.45%
Sustainable growth rate is -91.12% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.127
Alpha is -33.54% below industry average alpha yield
Alpha is 810% higher than market/& is unsustainably high
Analysis of Cost of Capital of
AVGO
Equity cost of capital:
0.108
Equity cost of capital is -15.86% below industry mean WACC
Unlevered (without debt) cost of capital:
4.11%
Before-tax cost of debt:
4.49%
After-tax cost of debt:
3.55%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.55%
WACC is -33.94% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$74.28
Revenue growth rate per share of (3Y):
8.78
Annual revenue growth rate is 25.32% above the industry average
EPS:
$20.18
Expected Annual growth rate of EPS (3Y):
37.37%
Expected future EPS growth rate is -28.32% lower than the Semiconductors industry
Free cash flow (FCF) per share:
$35.94
Balance sheet equity growth per share: 115.45%
Equity growth rate per share is 715.37% higher than the industry
Debt per share
$97.09
EBITDA per share
$41.36
Valuation Analysis Today of
AVGO
P/E Ratio:
21.79
P/E Ratio of Competitors/Peers:
22
P/E ratio is -0.97% lower than main peers & is -47.47% lower than the industry
Stock price/value with industry average P/E ratio: $837.00
AVGO is -40.24% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $206.75
Present value of the expected future dividends only: $196.09
P/S (Price to Sales ratio):
6.73
Price to sales ratio is -17.14% below the industry mean
P/B (Price to book value ratio):
8.78
Price to free cash flow: 13.92
Price to free cash flow ratio is -70.76% lower than the industry
Net income growth rate (3Y):
-42.87%
Net income growth rate is -25.17% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 19.76%
Dividend yeild: 3.18%
Previous Dividend: $4.10
Previous adjusted dividend: $4.10
Previous Dividend: $15.90
Expected next dividend best case: $4.39
Expected next dividend worst case: $3.81
Average dividend payment (long-term): $3.61
Average dividend increase/decrease (growth rate) % per period: 2.47%
Expected next dividend payment date: 28/09/2022
Expected next dividend record date: 20/09/2022
-
Previous dividend payment date: 30/06/2022
Previous dividend record date: 22/06/2022
-
Dividend History:
2022-06-21--$4.10
2021-12-21--$4.10
2021-06-21--$3.60
2022-03-21--$4.10
2021-09-21--$3.60
2021-03-19--$3.60
Dividend growth rate is -6.97% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
170.50%
Net debt to equity ratio:
127.36%
Debt to assets ratio:
53.54%
Net debt to assets ratio:
40.00%
Debt-to-asset ratio is 37.35% above industry average
Ability to repay debt:
Interest coverage ratio:
9.41
Interest coverage ratio is -71.28% less than industry average
Looking forward:
Debt growth rate:
-3.24%
Annual debt growth is -104% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.65%
Analysis of Key Statistics
Correlation of price movement with the market:
0.799
Statistical significance of correlation:
AVGO has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.627
Stock price is 27.30% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.627
Correlation of price movement with Nasdaq (^IXIC):
0.019
Covariance of price movement with the market:
0.028
Kurtosis
10.723
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.66
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
AVGO
Gross Profit Margin Ratio:
257%
Operating Profit Margin Ratio:
37.37%
Operating profit margin is 58.84% higher than the industry
Net Profit Margin Ratio:
257%
Effective Tax Rate:
4.75%
Effective tax rate is -68.54% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
38.82%
Return on equity (ROE) is 35.76% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
12.19%
Return on assets (ROA) is -7.38% lower than the industry
Financial Leverage:
2.2x
Current Ratio:
2.44
Current ratio is -39.92% below industry average
Cash Conversion Cycle (days):
8.2
Cash conversion cycle is -85.12% below industry average
The remaining useful life of property plant & equipment is: 8.9 years
Stock based compensation to net income ratio:
4.34%
In-depth Efficiency Analysis
Revenue generated per employee:
1.5M
Each employee generates 142% more revenue than industry average revenue per employee
EBITDA generated per employee:
835.1K
Each employee generates 258% more EBITDA than industry average revenue per employee
Profit generated per employee:
446.4K
Each employee generates 177% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
169.3K
Each employee generates 510% more free cash flow than industry average revenue per employee
Assets/Capital per employee
2.9M
Each employee generates 510% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -2.29%
Growth rate in R&D investment/expenditure is -116.21% lower than the industry
Competitors/Peer firms of
AVGO
CISCO SYSTEMS, INC. (XNAS:CSCO)
ADOBE INC. (XNAS:ADBE)
INTEL CORPORATION (XNAS:INTC)
QUALCOMM INCORPORATED (XNAS:QCOM)
TEXAS INSTRUMENTS INCORPORATED (XNAS:TXN)
INTUIT INC. (XNAS:INTU)
ADVANCED MICRO DEVICES, INC. (XNAS:AMD)
APPLIED MATERIALS, INC. (XNAS:AMAT)
MICRON TECHNOLOGY, INC. (XNAS:MU)
Current Analyst Ratings
Strong buy�42%
Buy�71%
Hold�8%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
5/1/22
Revenue:
29.99B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
10.67B
19.32B
4.87B
-
1.37B
-
1.80B
8.05B
-
1.77B
5.56B
16.70B
11.21B
8.93B
9.37B
445.00M
8.93B
Statement of Cash Flow
Date:
Period:
1.29B
Differed Income Tax :
70.00M
Stock Based Compensation :
387.00M
Change in Working Capital :
- 777000.00K
Accounts Receivables:
- 468000.00K
Other Working Capital:
- 86000.00K
Other Non-Cash Items:
47.00M
Net Cash Provided by Operating Activities:
3.49B
Investments in PP&E:
- 101000.00K
Net Acquisitions:
-
Purchases of Investments:
- 200000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
1/30/22
2022
Q1
10.22B
-
10.22B
2.54B
1.52B
1.06B
15.34B
2.30B
43.45B
10.24B
-
-
1.89B
57.88B
-
73.22B
1.08B
300.00M
556.00M
3.03B
1.88B
6.29B
39.21B
4.74B
43.94B
-
50.23B
-
4.98B
- 115000.0K
18.10B
January 30, 2022 at 7:00:00 AM
18.72B
22.99B
73.22B
-
39.51B
29.3B
-
- 8000.00K
- 309000.00K
- 255000.00K
1.00M
- 3099000.00K
- 1764000.00K
- 4000.00K
- 5121000.00K
-
- 1944000.00K
10.22B
12.16B
3.49B
- 101000.00K
3.39B
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
AVGO
2023
2024
2025
2026
2027
$639.52
$687.38
$738.83
$794.12
$853.55