Analyzing Broadcom (AVGO) & Its Peers

Broadcom (NASDAQ:AVGO) is one of 221 publicly-traded companies in the “Semiconductors & Semiconductor Equipment” industry, but how does it contrast to its rivals? We will compare Broadcom to similar businesses based on the strength of its analyst recommendations, dividends, risk, profitability, valuation, institutional ownership and earnings.

Valuation and Earnings

This table compares Broadcom and its rivals revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Broadcom	$63.89 billion	$23.13 billion	37.51
Broadcom Competitors	$7.27 billion	$2.48 billion	8.71

Broadcom has higher revenue and earnings than its rivals. Broadcom is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Broadcom and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadcom	42.94%	48.33%	23.78%
Broadcom Competitors	-1,278.97%	-126.37%	-3.98%

Analyst Recommendations

This is a breakdown of current ratings for Broadcom and its rivals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadcom	0	5	39	1	2.91
Broadcom Competitors	3503	12354	25779	999	2.57

Broadcom presently has a consensus target price of $530.52, indicating a potential upside of 80.64%. As a group, “Semiconductors & Semiconductor Equipment” companies have a potential upside of 53.75%. Given Broadcom’s stronger consensus rating and higher probable upside, equities analysts plainly believe Broadcom is more favorable than its rivals.

Insider and Institutional Ownership

76.4% of Broadcom shares are owned by institutional investors. Comparatively, 54.6% of shares of all “Semiconductors & Semiconductor Equipment” companies are owned by institutional investors. 1.9% of Broadcom shares are owned by company insiders. Comparatively, 11.9% of shares of all “Semiconductors & Semiconductor Equipment” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Broadcom has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500. Comparatively, Broadcom’s rivals have a beta of 2.80, indicating that their average stock price is 180% more volatile than the S&P 500.

Dividends

Broadcom pays an annual dividend of $2.60 per share and has a dividend yield of 0.9%. Broadcom pays out 33.2% of its earnings in the form of a dividend. As a group, “Semiconductors & Semiconductor Equipment” companies pay a dividend yield of 1.0% and pay out 28.6% of their earnings in the form of a dividend. Broadcom has increased its dividend for 15 consecutive years. Broadcom lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Summary

Broadcom beats its rivals on 10 of the 15 factors compared.

About Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.