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华尔街日报Inquiry Into Broadcom's Competitor Dynamics In Semiconductors & Semiconductor Equipment Industry
In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Broadcom (NASDAQ:AVGO) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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 | 71.55 | 19.83 | 25.93 | 11.02% | $8.29 | $10.7 | 12.93% |
| NVIDIA Corp | 43.99 | 36.33 | 23.35 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.67 | 9.33 | 12.84 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 109.51 | 5.60 | 10.66 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 30.63 | 4.83 | 7 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 35.15 | 8.89 | 4.39 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 621.83 | 1.67 | 3.08 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.34 | 9.70 | 9.41 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 61.05 | 4.03 | 12.55 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 155.26 | 17.35 | 29.26 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.60 | 5.07 | 9.37 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.40 | 5.76 | 4.86 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.41 | 12.77 | 17.21 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 30.94 | 3.30 | 1.68 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.84 | 3.08 | 5.50 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 120.98 | 19.71 | 33.67 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 44.72 | 1.29 | 2.05 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 74.74 | 2.78 | 3.69 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.64 | 1.72 | 2.59 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 66.31 | 4.52 | 8.59 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 372.50 | 14.43 | 20.80 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 45.09 | 7.91 | 15.18 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 94.84 | 8.57 | 11.32 | 5.18% | $39.1 | $33.81 | 32.88% |
After thoroughly examining Broadcom, the following trends can be inferred:
The Price to Earnings ratio of 71.55 is 0.75x lower than the industry average, indicating potential undervaluation for the stock.
The elevated Price to Book ratio of 19.83 relative to the industry average by 2.31x suggests company might be overvalued based on its book value.
The Price to Sales ratio of 25.93, which is 2.29x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 11.02% that is 5.84% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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 below the industry average of 32.88%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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.
By considering the Debt-to-Equity ratio, Broadcom can be compared to its top 4 peers, leading to the following observations:
Broadcom holds a middle position in terms of the debt-to-equity ratio compared to its top 4 peers.
This indicates a balanced financial structure with a moderate level of debt and an appropriate reliance on equity financing with a debt-to-equity ratio of 0.8.
Key Takeaways
For Broadcom, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest overvaluation relative to industry standards. In terms of ROE, Broadcom performs well above average, while EBITDA and gross profit margins are lower. Additionally, revenue growth is lagging behind industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.