|
Related Topics
|
Category: Stock Market and Broadcom
Date: 14 September 2019 Stock Price: $290.32 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of Broadcom a a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions.
|
About Broadcom
Broadcom Inc. (NASDAQ: AVGO), a Delaware corporation headquartered in San Jose, CA, is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Broadcom's category-leading product portfolio serves critical markets including data center, networking, enterprise software, broadband, wireless, storage and industrial. Our solutions include data center networking and storage, enterprise and mainframe software focused on automation, monitoring and security, smartphone components, telecoms and factory automation.
The image shows Broadcom at a Glance.
The image shows Broadcom at a Glance.
Financial overview of Broadcom's latest earnings report
The numbers we are interested in (for the quarter):
- Net revenue: $5.515 billion (up from $5.063 billion from the same quarter of the previous year)
- Cost of revenue: $1.651 billion (down from $1.680 billion for the same quarter of the previous year)
- Net income: $715 million (down from $1.196 billion for the same quarter of the previous year)
- Diluted earnings per share: $1.71 (down from $2.71 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 418 million (unchanged from 441 million for the same quarter of the previous year)
- Cash and cash equivalents: $5.426 billion
- Cash and cash equivalents per share: $12.98
- Cash and cash equivalents makes up 4.4% of Broadcom's market capital
- Cash and cash equivalents makes up 7.83% of Broadcom's total assets
- Trade accounts receivable: $3.539 billion
- Trade accounts receivable makes up 5.1% of the Broadcom's total assets.
- Inventories: $1.091 billion
- Inventories makes up 1.56% of Broadcom's total assets
- Stockholders equity: $21.503 billion
- Stockholders equity per share: $51.44
- Broadcom is trading at 5.6 times its stockholders equity per share
- Cash generated from operations: $2.419 billion
- Cash generated from operations per share: $5.96
Broadcom's management commentary on the results and earnings guidance
SAN JOSE, Calif., Sept. 12, 2019 /PRNewswire/ -- Broadcom Inc. (Nasdaq: AVGO), a global technology leader that designs, develops and supplies semiconductor and infrastructure software solutions, today reported financial results for its third quarter of fiscal year 2019, ended August 4, 2019, and announced a quarterly dividend.
"Our broad portfolio of mission critical semiconductor and infrastructure software solutions, utilized by the world's largest enterprises, continued to drive sustained revenues and robust cash flow despite a challenging market backdrop," said Hock Tan, President and CEO of Broadcom Inc. "Looking at the semiconductor solutions segment, we believe demand has bottomed out but will continue to remain at these levels due to the current uncertain environment."
"During the quarter, we generated over $2.3 billion in free cash flow representing over 8% growth on a year on year basis," said Tom Krause, CFO of Broadcom Inc. "We returned over $2 billion to stockholders in the quarter including $1.1 billion in cash dividends and approximately $1 billion in share repurchases and eliminations. We remain fully committed to maintaining our investment grade credit rating and, looking forward, we intend to focus on deleveraging our balance sheet."
Quarterly Dividend
The Company's Board of Directors has approved a quarterly cash dividend of $2.65 per share.
The dividend is payable on October 1, 2019 to stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 23, 2019.
Fiscal Year 2019 Business Outlook
Based on current business trends and conditions, the outlook for continuing operations for fiscal year 2019, ending November 3, 2019, including contributions from CA, is expected to be as follows:
"Our broad portfolio of mission critical semiconductor and infrastructure software solutions, utilized by the world's largest enterprises, continued to drive sustained revenues and robust cash flow despite a challenging market backdrop," said Hock Tan, President and CEO of Broadcom Inc. "Looking at the semiconductor solutions segment, we believe demand has bottomed out but will continue to remain at these levels due to the current uncertain environment."
"During the quarter, we generated over $2.3 billion in free cash flow representing over 8% growth on a year on year basis," said Tom Krause, CFO of Broadcom Inc. "We returned over $2 billion to stockholders in the quarter including $1.1 billion in cash dividends and approximately $1 billion in share repurchases and eliminations. We remain fully committed to maintaining our investment grade credit rating and, looking forward, we intend to focus on deleveraging our balance sheet."
Quarterly Dividend
The Company's Board of Directors has approved a quarterly cash dividend of $2.65 per share.
The dividend is payable on October 1, 2019 to stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 23, 2019.
Fiscal Year 2019 Business Outlook
Based on current business trends and conditions, the outlook for continuing operations for fiscal year 2019, ending November 3, 2019, including contributions from CA, is expected to be as follows:
Broadcom (NASDAQ: AVGO) stock price history
The image below shows the stock price history of Broadcom over the last 5 years. And its been a very good time for for Broadcom stockholders over the last 5 years. 5 years ago Broadcom was trading at $87 a stock and it's currently trading at $290.32. That's a very handsome return of 233% for Broadcom over the last 5 years. The stock is trading a lot closer to its 52 week high of $323 than it is to its 52 week low of $208 which is a clear indication that the short term momentum and sentiment towards Broadcom is very positive.
Recent coverage of Broadcom
The extract below touches on the latest news regarding Broadcom as obtained from Zacks.
Broadcom (AVGO - Free Report) delivered third-quarter fiscal 2019 non-GAAP earnings of $5.16 per share outpacing the Zacks Consensus Estimate by 5 cents and improving 3.6% from the year-ago quarter. Non-GAAP revenues from continuing operations were $5.515 billion, up 8.9% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $5.501.
Shares Down on Tepid Guidance
In the pre-market, shares of Broadcom are down approximately 1.2%. The decline can be attributed to tepid fiscal 2019 guidance. Notably, the company maintained outlook for fiscal 2019. Broadcom continues to anticipate non-GAAP revenues of almost $22.5 billion. The Zacks Consensus Estimate is currently pegged at $22.58 billion
Read the full article here.
Broadcom (AVGO - Free Report) delivered third-quarter fiscal 2019 non-GAAP earnings of $5.16 per share outpacing the Zacks Consensus Estimate by 5 cents and improving 3.6% from the year-ago quarter. Non-GAAP revenues from continuing operations were $5.515 billion, up 8.9% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $5.501.
Shares Down on Tepid Guidance
In the pre-market, shares of Broadcom are down approximately 1.2%. The decline can be attributed to tepid fiscal 2019 guidance. Notably, the company maintained outlook for fiscal 2019. Broadcom continues to anticipate non-GAAP revenues of almost $22.5 billion. The Zacks Consensus Estimate is currently pegged at $22.58 billion
Read the full article here.
Broadcom (NASDAQ: AVGO) latest stock valuation
So based on Broadcom's latest earnings report and their fiscal guidance provided what is Broadcom stock worth? Based on Broadcom's latest earnings report and their guidance provided we have at target (full value) price on Broadcom stock of $259 a stock. We therefore believe the stock is overvalued and would not recommend that long term fundamental or value investors buy into Broadcom at its current price. We suggest looking to buy into Broadcom at least 10% below our target price. So a suggested entry point into Broadcom would be around $233 or below.