Performance Comparison: Broadcom And Competitors In Semiconductors & Semiconductor Equipment Industry
In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Broadcom (NASDAQ:AVGO) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.
Broadcom Background
Broadcom is one of the largest semiconductor companies in the world and has also expanded into infrastructure software. Its semiconductors primarily serve computing, wired connectivity, and wireless connectivity. It has a significant position in custom AI chips to train and run inference for large language models. It is primarily a fabless designer but holds some manufacturing in-house. In software, it sells virtualization, infrastructure, and security software to large enterprises, financial institutions, and governments. Broadcom is the product of consolidation. Its businesses are an amalgamation of former companies like legacy Broadcom and Avago Technologies in chips, as well as VMware, Brocade, CA Technologies, and Symantec in software.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Broadcom Inc | 69.16 | 19.16 | 25.06 | 11.02% | $8.29 | $10.7 | 12.93% |
| NVIDIA Corp | 43.10 | 35.60 | 22.87 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.74 | 9.35 | 12.87 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 105.27 | 5.38 | 10.25 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 23.63 | 4.76 | 6.63 | 9.28% | $5.9 | $5.05 | 20.57% |
| Qualcomm Inc | 34.77 | 8.80 | 4.35 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 604.67 | 1.63 | 2.99 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.09 | 9.63 | 9.34 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 60.29 | 3.98 | 12.39 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 145.53 | 16.26 | 27.43 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.74 | 5.10 | 9.42 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.45 | 5.56 | 4.70 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.85 | 12.48 | 16.82 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 30.38 | 3.24 | 1.65 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.09 | 3.12 | 5.57 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 119.46 | 19.46 | 33.24 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 44.40 | 1.28 | 2.03 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 74.44 | 2.77 | 3.67 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 15.12 | 1.78 | 2.68 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 67.46 | 4.60 | 8.74 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 365.15 | 14.14 | 20.39 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 43.57 | 7.64 | 14.67 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 92.39 | 8.41 | 11.08 | 5.33% | $39.1 | $33.81 | 31.67% |
By conducting a comprehensive analysis of Broadcom, the following trends become evident:
With a Price to Earnings ratio of 69.16, which is 0.75x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 19.16 which exceeds the industry average by 2.28x.
The Price to Sales ratio of 25.06, which is 2.26x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The company has a higher Return on Equity (ROE) of 11.02%, which is 5.69% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $8.29 Billion, which is 0.21x below the industry average. This potentially indicates lower profitability or financial challenges.
The gross profit of $10.7 Billion is 0.32x below that of its industry, suggesting potential lower revenue after accounting for production costs.
The company's revenue growth of 12.93% is significantly lower compared to the industry average of 31.67%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, Broadcom can be assessed by comparing it to its top 4 peers, resulting in the following observations:
In the context of the debt-to-equity ratio, Broadcom holds a middle position among its top 4 peers.
This indicates a moderate level of debt relative to its equity with a debt-to-equity ratio of 0.8, which implies a relatively balanced financial structure with a reasonable debt-equity mix.
Key Takeaways
The low P/E ratio suggests Broadcom may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the market values the company's assets and sales more highly. On the other hand, Broadcom's high ROE reflects strong profitability relative to its equity, while the low EBITDA, gross profit, and revenue growth indicate potential challenges in generating earnings and expanding operations.
This article was generated by Benzinga's automated content engine and reviewed by an editor.