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Category: Broadcom (AVGO)
Date: 7 September 2020 Stock price of Broadcom: $362.95 We take a look at the latest earnings report from Broadcom (AVGO) a supplier of semiconductor and infrastructure software solutions. The group reported $5.821 billion in revenues , up 5.5% from the same quarter of the previous year, and they reported net earnings for the quarter of $688 million
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We delivered third quarter revenue results in-line with our expectations, driven by healthy demand from cloud and telecom customers, which more than offset the expected reset in wireless -Hock Tan, President and CEO of Broadcom Inc "
More About Broadcom (AVGO)
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, mainframe and cyber security software focused on automation, monitoring and security, smartphone components, telecoms and factory automation
Overview of Broadcom 3Q 2020 earnings report
Below the highlights of Broadcom (AVGO) latest earnings report
- Revenue of $5,821 million; GAAP net income of $688 million; Adjusted EBITDA of $3,342 million
- GAAP diluted EPS of $1.45; Non-GAAP diluted EPS of $5.40
- $3,073 million of free cash flow from operations, defined as cash from operations of $3,178 million less capital expenditures of $105 million
- Quarterly common stock dividend of $3.25 per share
- Fourth quarter revenue guidance of $6.4 billion plus or minus $150 million
- Fourth quarter Adjusted EBITDA guidance of $3,744 million plus or minus $75 million, or 58.5% of revenue at the midpoint of guidance
Broadcom (AVGO) management commentary on their 3Q 2020 earnings
SAN JOSE, Calif., Sept. 3, 2020 /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 2020, ended August 2, 2020, provided guidance for the fourth quarter of its fiscal year 2020 and announced its quarterly dividends.
"We delivered third quarter revenue results in-line with our expectations, driven by healthy demand from cloud and telecom customers, which more than offset the expected reset in wireless," said Hock Tan, President and CEO of Broadcom Inc. "Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in enterprise."
"We generated record free cash flow of over $3 billion, which represented 33 percent growth on a year on year basis, and reduced total debt by $1.9 billion in the quarter," said Tom Krause, CFO of Broadcom Inc. "Looking ahead, our cash flow outlook remains robust and we plan to pay down an additional $3 billion in debt in the fourth quarter."
"We delivered third quarter revenue results in-line with our expectations, driven by healthy demand from cloud and telecom customers, which more than offset the expected reset in wireless," said Hock Tan, President and CEO of Broadcom Inc. "Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in enterprise."
"We generated record free cash flow of over $3 billion, which represented 33 percent growth on a year on year basis, and reduced total debt by $1.9 billion in the quarter," said Tom Krause, CFO of Broadcom Inc. "Looking ahead, our cash flow outlook remains robust and we plan to pay down an additional $3 billion in debt in the fourth quarter."
Broadcom (AVGO) stock vs Intel (INTC) stock over the last 5 years
The image below shows the stock price performance of Broadcom (AVGO) and Intel (INTC) over the last 5 years. Over the 5 year period Broadcom provided a return of 197.2% while the stock of Intel increased by 66.9% over the same period of time.
Stock price target for Broadcom (AVGO)
So based on Broadcom's latest earnings report what do we value their stock at? Based on their 3rd quarter 2020 earnings report our valuation model provides a target price of $345.60 per Broadcom (AVGO) stock. We therefore believe that the stock of Broadcom is fully valued at its current price
We usually recommend that long term and value investors look to enter a stock at least 10% below our target price. A good entry into the stock of Broadcom would therefore be at $311 or below.
Since the stock of Broadcom is trading at very close to our target price we rate the stock of Broadcom (AVGO) as a hold
We usually recommend that long term and value investors look to enter a stock at least 10% below our target price. A good entry into the stock of Broadcom would therefore be at $311 or below.
Since the stock of Broadcom is trading at very close to our target price we rate the stock of Broadcom (AVGO) as a hold
Next earnings release of Broadcom (AVGO)
It is expected that Broadcom (AVGO) will release their 4th quarter and full fiscal 2020 earnings report in early December 2020
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