BROADCOM INC.
NDQ-AVGO RECENT
PRICE 1440.47 P/ERATIO 49.4(Trailing:
Median: 31.0) P/E RATIO 2.81 YLD 1.5%
53.4 RELATIVE DIV’D VALUE
LINE
TIMELINESS 3 Lowered 12/8/23 High:
Low:
54.5
30.6
105.0
51.9
150.5
95.2
184.0
114.3
285.7
173.3
274.3
197.5
331.2
230.3
438.5
155.7
677.8
419.1
672.2
415.1
1151
550.0
1449
1041
Target Price Range
2027 2028 2029
SAFETY 3 New 10/5/12 LEGENDS
19.0 x ″Cash Flow″ p sh
TECHNICAL 3 Lowered 4/5/24 . . . . Relative Price Strength
Options: Yes
BETA 1.10 (1.00 = Market) Shaded area indicates recession
1250
18-Month Target Price Range
Low-High Midpoint (% to Mid) 800
$1108-$2379 $1744 (20%) 600
500
2027-29 PROJECTIONS 400
Ann’l Total 300
Price Gain Return 250
High 1950 (+35%) 10% 200
Low 1300 (-10%) Nil
% TOT. RETURN 5/24 150
Institutional Decisions THIS VL ARITH.*
3Q2023 4Q2023 1Q2024 STOCK INDEX
Percent 30 1 yr. 67.7 19.8
to Buy 1167 1605 1454 shares 20
to Sell 1059 1022 1306 3 yr. 204.7 7.5
traded 10
Hld’s(000) 328037 356555 351457 5 yr. 520.4 78.1
Avago Technologies Limited completed its 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 © VALUE LINE PUB. LLC 27-29
initial public offering in August 2009. At that 16.86 24.70 33.24 43.15 51.10 56.78 58.73 66.46 79.43 86.52 102.05 115.15 Sales per sh 152.00
time, 21.5 million shares were sold to the 6.44 8.52 3.55 15.74 19.45 21.39 23.53 30.21 38.77 43.28 33.85 49.50 ‘‘Cash Flow’’ per sh 71.00
public at an average price of $15.00 per 3.80 4.95 d4.57 4.03 8.81 6.49 6.33 15.00 26.53 32.98 22.50 40.00 Earnings per sh A 65.00
share. The company completed additional 1.13 1.55 1.94 4.08 7.00 10.60 13.00 14.40 16.40 18.40 21.40 23.00 Div’ds Decl’d per sh B 32.00
offerings on March 1, 2011 (25 million 1.61 2.15 1.82 2.62 1.56 1.09 1.14 1.07 1.01 1.09 1.15 1.35 Cap’l Spending per sh 2.00
shares), May 31, 2011 (25 mill.), and Sep- 12.75 17.06 47.43 49.63 65.34 62.67 58.70 60.44 54.33 57.94 141.95 154.45 Book Value per sh D 211.20
tember 28, 2011 (17.25 mill.). Avago ac- 254.33 276.26 398.28 408.73 408.00 398.00 406.71 413.00 418.00 414.00 490.00 495.00 Common Shs Outst’g C 500.00
quired Broadcom Limited on February 1, 17.3 23.8 -- NMF 27.8 42.4 48.6 30.7 20.8 21.5 Bold figures are Avg Ann’l P/E Ratio 25.0
2016, adopting the Broadcom moniker fol- .91 1.20 -- NMF 1.50 2.26 2.50 1.66 1.20 1.20 Value Line Relative P/E Ratio 1.40
estimates
lowing completion of the deal. 1.7% 1.3% 1.3% 1.9% 2.9% 3.8% 4.2% 3.1% 3.0% 2.6% Avg Ann’l Div’d Yield 2.6%
CAPITAL STRUCTURE as of 2/4/24 4289.0 6824.0 13240 17636 20848 22597 23888 27450 33203 35819 50000 57000 Sales ($mill) 76000
Total Debt $75901 mill. Due in 5 Yrs $9538 mill. 39.4% 38.0% 19.9% 40.4% 44.2% 40.9% 45.7% 53.0% 58.0% 56.6% 43.0% 53.5% Operating Margin 57.5%
LT Debt $73468 mill. LT Interest $3800 mill. 625.0 962.0 3042.0 4737.0 4081.0 5808.0 6905.0 6041.0 4984.0 3835.0 5440 4490 Depreciation ($mill) 3000
(61% of Cap’l)
Leases, Uncapitalized: Annual rentals $75 mill. 1014.0 1391.0 d1627 1698.0 3855.0 2736.0 2961.0 6736.0 11495 14082 11135 20005 Net Profit ($mill) 32510
5.0% 5.2% -- 1.9% 7.5% -- -- .4% 7.6% 6.7% 13.0% 13.0% Income Tax Rate 14.0%
Pension Assets-11/23 $1105 mill. 23.6% 20.4% NMF 9.6% 18.5% 12.1% 12.4% 24.5% 34.6% 39.3% 22.3% 35.1% Net Profit Margin 42.8%
Oblig. $1101 mill. 2819.0 2656.0 4047.0 13294 6769.0 3018.0 5524.0 10305 11452 13442 6900 9900 Working Cap’l ($mill) 23105
4543.0 3903.0 13188 17431 17493 30011 40235 39440 39075 37621 70000 65000 Long-Term Debt ($mill) 50000
Common Stock 463,421,237 shs. 3243.0 4714.0 18892 20285 26657 24970 23901 24989 22709 23988 69545 76450 Shr. Equity ($mill) 105600
as of 3/1/2024 13.7% 17.3% NMF 5.1% 9.4% 6.3% 6.0% 11.9% 20.0% 24.2% 8.0% 14.0% Return on Total Cap’l 21.0%
31.3% 29.5% NMF 8.4% 14.5% 11.0% 12.4% 27.0% 50.6% 58.7% 16.0% 26.0% Return on Shr. Equity 31.0%
MARKET CAP: $668 billion (Large Cap) 22.5% 20.9% NMF NMF 3.2% NMF NMF 2.1% 18.5% 26.8% 16.0% 26.0% Retained to Com Eq 20.0%
CURRENT POSITION 2022 2023 2/4/24 28% 29% NMF 103% 78% NMF NMF 92% 64% 54% 48% 37% All Div’ds to Net Prof 52%
($MILL.)
Cash Assets 12416 14189 11864 BUSINESS: Broadcom Inc. is a technology conglomerate (formerly company LSI (’14) and networking equipment co. Brocade (’17).
Receivables 2958 3154 4969 known as Avago), which originated as a semiconductor company. It Employs approximately 20,000 (as of 10/23). Pres./CEO: Hock E.
Inventory (FIFO) 1925 1898 1920 designs, develops, and supplies a range of analog, mixed-signal, Tan. Officers/directors own 2.0% of common stock; Vanguard
Other 1205 1606 8439
Current Assets 18504 20847 27192 and digital semiconductor devices (62% of q1 24 revenues). It has Group, 9.4%; BlackRock, 7.5%; Capital World Investors, 6.1%
Accts Payable 998 1210 1496 acquired numerous software (38% of revs.) companies, including (2/24 proxy). Inc.: DE. Address: 3421 Hillview Ave., Palo Alto, CA
Debt Due 440 1608 2433 CA (2018), Symantec (’19) and VMWare (’23), as well as storage 94304. Telephone: (650) 427-6000. Internet: www.broadcom.com.
Other 5614 4587 16440
Current Liab. 7052 7405 20369 Broadcom’s diverse product portfolio ethernet NIC solutions are boosting re-
is being overshadowed by investors’ sults thanks to demand from hyperscalers,
ANNUAL RATES Past Past Est’d ’21-’23 excitement about artificial in- a trend which should persist for years.
of change (per sh) 10 Yrs. 5 Yrs. to ’27-’29
Sales 23.0% 13.0% 12.0% telligence. Widely-known for its domi- VMWare’s onboarding appears on
‘‘Cash Flow’’ 29.0% 23.5% 16.5% nance in networking markets, as well as a track. The massive acquisition won’t be
Earnings 27.5% 55.0% 30.0% number of prominent software acquisi- accretive until next year, but management
Dividends 40.0% 30.5% 18.5%
Book Value 19.5% 1.0% 10.0% tions, the company has a unique profile. is steadfast that overall EBITDA margins
Semiconductor revenues (62% of total in will be 40% this year. Investors will be
Fiscal QUARTERLY SALES ($ mill.) Full
Year Fiscal the first quarter) have increased at a 13% looking for this level to be reiterated when
Ends Jan.Per Apr.Per Jul.Per Oct.Per Year compound annual growth rate since 2019, second quarter results are announced
2021 6655 6610 6778 7407 27450 due to the digitization of several non-tech (scheduled to be immediately after this Is-
2022 7706 8103 8464 8930 33203 industries, but AI should accelerate this sue went to press). Meanwhile, efforts to
2023 8915 8733 8876 9295 35819 pace. Still, overall January-quarter semi- upsell infrastructure software to deploy
2024 11961 12000 12500 13539 50000
2025 14000 14000 14500 14500 57000 conductor revenue grew just 4%, owing to private clouds or build on-premise data
Fiscal Full
the ongoing inventory correction with telco centers are ramping through VCF,
EARNINGS PER SHARE A customers and poor results (down 29% VMWare Cloud Foundation.
Year Fiscal
Ends Jan.Per Apr.Per Jul.Per Oct.Per Year yoy) in server storage markets (12% of Current shareholders should keep
2021 3.05 3.30 4.20 4.45 15.00 chip revenue). Yet, Wall Street is waiting positions, but we would advise inter-
2022 5.59 5.93 7.15 7.83 26.53 out the current softness due to the promise ested accounts to wait for a better
2023 8.80 8.15 7.74 8.25 32.98
2024 2.84 4.75 7.05 7.86 22.50 of AI. Management recently revised its entry point. Leadership’s solid track rec-
2025 9.50 9.75 10.00 10.75 40.00 outlook for AI-related business, stating ord of integrating acquisitions gives us
that it will account for 35% of the semicon- some confidence that the merger of
Cal- QUARTERLY DIVIDENDS PAID B Full ductor operations’ revenue in fiscal 2024 VMWare will likely be successful. And
endar Mar.31 Jun.30 Sep.30 Dec.31 Year
(ends October 31st). AI accelerator chips networking will be one of the biggest bene-
2020 3.25 3.25 3.25 3.60 13.35 have outsized implications for networking ficiaries of AI. Still, the stock’s current
2021 3.60 3.60 3.60 4.10 14.35 activity and will bolster Broadcom’s valuation appears excessive, even on a
2022 4.10 4.10 4.10 4.60 16.90
2023 4.60 4.60 4.60 5.25 19.05 market-leading reputation. The latest gen- non-GAAP basis.
2024 5.25 eration of Tomahawk switches and Thor2 Charles C. Moran June 21, 2024
(A) Diluted GAAP earnings. Fiscal years end (B) Dividends paid late March, June, Septem- (D) Includes intangibles. In 2023, $47.5 billion, Company’s Financial Strength B++
last Sunday in October. Quarterly EPS may not ber, and December. or $114.73 per share. Stock’s Price Stability 65
sum due to rounding. Next earnings report due (C) In millions. Price Growth Persistence 95
early September. Earnings Predictability 30
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