Overview of Broadcom (AVGO) 3rd quarter earnings report for their 2021 fiscal year
Category: Broadcom (AVGO)
Date: 6 September 2021 Stock price of Broadcom: $497.68 Market Capital of Broadcom : $204.2 billion We take a look at the latest earnings report from Broadcom (AVGO) a supplier of semiconductor and infrastructure software solutions. The group reported $6.78 billion in revenues and they reported net earnings for the quarter of $1.78 billion
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Broadcom delivered record revenues in the third quarter reflecting our product and technology leadership across multiple secular growth markets in cloud, 5G infrastructure, broadband, and 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 2021 earnings
- Revenue of $6,778 million for the third quarter, up 16 percent from the prior year period
- GAAP net income of $1,876 million for the third quarter; Adjusted EBITDA of $4,123 million for the third quarter
- GAAP diluted EPS of $4.20 for the third quarter; Non-GAAP diluted EPS of $6.96 for the third quarter
- $3,426 million of free cash flow from operations for the third quarter, defined as cash from operations of $3,541 million less capital expenditures of $115 million
- Quarterly common stock dividend of $3.60 per share
- Fourth quarter revenue guidance of approximately $7.35 billion, an expected increase of 14 percent from the prior year period
- Fourth quarter Adjusted EBITDA guidance of approximately 61 percent of projected revenue
- GAAP net income of $1,876 million for the third quarter; Adjusted EBITDA of $4,123 million for the third quarter
- GAAP diluted EPS of $4.20 for the third quarter; Non-GAAP diluted EPS of $6.96 for the third quarter
- $3,426 million of free cash flow from operations for the third quarter, defined as cash from operations of $3,541 million less capital expenditures of $115 million
- Quarterly common stock dividend of $3.60 per share
- Fourth quarter revenue guidance of approximately $7.35 billion, an expected increase of 14 percent from the prior year period
- Fourth quarter Adjusted EBITDA guidance of approximately 61 percent of projected revenue
Broadcom (AVGO) management commentary on their 3Q 2021 earnings
SAN JOSE, Calif., Sept. 2, 2021 /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 2021, ended August 1, 2021, provided guidance for the fourth quarter of its fiscal year 2021 and announced its quarterly dividends.
"Broadcom delivered record revenues in the third quarter reflecting our product and technology leadership across multiple secular growth markets in cloud, 5G infrastructure, broadband, and wireless," said Hock Tan, President and CEO of Broadcom Inc. "We are projecting the momentum to continue in the fourth quarter."
"Our business model continues to perform. Consolidated revenue grew 16% year-over-year to $6.8 billion and operating profit increased 24% with adjusted EBITDA margin a record 61%," said Kirsten Spears, CFO of Broadcom Inc. "We generated $3.4 billion in free cash flow or 51% of revenue in the quarter, and we expect free cash flow to remain strong in the fourth quarter."
Fourth Quarter Fiscal Year 2021 Business Outlook
Based on current business trends and conditions, the outlook for the fourth quarter of fiscal year 2021, ending October 31, 2021, is expected to be as follows:
Quarterly Dividends
The Company's Board of Directors has approved a quarterly cash dividend on its common stock of $3.60 per share. The common stock dividend is payable on September 30, 2021 to common stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 22, 2021.
The Company's Board of Directors has also approved a quarterly cash dividend on its 8.00% Mandatory Convertible Preferred Stock, Series A, of $20.00 per share. This dividend is payable on September 30, 2021 to preferred stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 15, 2021.
"Broadcom delivered record revenues in the third quarter reflecting our product and technology leadership across multiple secular growth markets in cloud, 5G infrastructure, broadband, and wireless," said Hock Tan, President and CEO of Broadcom Inc. "We are projecting the momentum to continue in the fourth quarter."
"Our business model continues to perform. Consolidated revenue grew 16% year-over-year to $6.8 billion and operating profit increased 24% with adjusted EBITDA margin a record 61%," said Kirsten Spears, CFO of Broadcom Inc. "We generated $3.4 billion in free cash flow or 51% of revenue in the quarter, and we expect free cash flow to remain strong in the fourth quarter."
Fourth Quarter Fiscal Year 2021 Business Outlook
Based on current business trends and conditions, the outlook for the fourth quarter of fiscal year 2021, ending October 31, 2021, is expected to be as follows:
- Fourth quarter revenue guidance of approximately $7.35 billion; and
- Fourth quarter Adjusted EBITDA guidance of approximately 61 percent of projected revenue
Quarterly Dividends
The Company's Board of Directors has approved a quarterly cash dividend on its common stock of $3.60 per share. The common stock dividend is payable on September 30, 2021 to common stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 22, 2021.
The Company's Board of Directors has also approved a quarterly cash dividend on its 8.00% Mandatory Convertible Preferred Stock, Series A, of $20.00 per share. This dividend is payable on September 30, 2021 to preferred stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 15, 2021.
Broadcom (AVGO) stock price chart over the last 5 years
The image below shows the stock price performance of Broadcom (AVGO) over the last 5 years. Its been a very good time for Broadcom stockholders. Over the 5 year period Broadcom provided a return of 186.6% to stockholders.
The stock of Broadcom is trading at a a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Broadcom's stock is positive at this point in time,
The stock of Broadcom is trading at a a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Broadcom's stock is positive at this point in time,
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 186.6% while the stock of Intel increased by 43.4% 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 2021
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