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华尔街日报Exploring The Competitive Space: Broadcom Versus Industry Peers In Semiconductors & Semiconductor Equipment
In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Broadcom (NASDAQ:AVGO) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within 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 | 73.23 | 20.37 | 26.54 | 11.02% | $9.86 | $12.25 | 28.18% |
| NVIDIA Corp | 46.83 | 38.68 | 24.85 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.92 | 9.73 | 13.38 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 112.51 | 5.76 | 10.95 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 26.26 | 5.29 | 7.37 | 9.28% | $8.35 | $7.65 | 56.65% |
| Qualcomm Inc | 34.88 | 8.83 | 4.36 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 605.83 | 1.63 | 3 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.26 | 9.68 | 9.39 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 60.69 | 4.01 | 12.47 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 143.62 | 16.05 | 27.07 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 30.87 | 5.29 | 9.77 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.93 | 5.66 | 4.78 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.21 | 12.67 | 17.07 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 31.62 | 3.37 | 1.72 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.67 | 3.21 | 5.73 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 127.42 | 20.76 | 35.46 | 7.99% | $0.09 | $0.18 | 272.08% |
| ON Semiconductor Corp | 76.29 | 2.83 | 3.76 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 44.93 | 1.30 | 2.06 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 14.88 | 1.75 | 2.63 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 69.99 | 4.77 | 9.07 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 382.65 | 14.82 | 21.37 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 44.85 | 7.87 | 15.10 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 94.77 | 8.76 | 11.49 | 5.33% | $39.22 | $33.93 | 33.38% |
When closely examining Broadcom, the following trends emerge:
With a Price to Earnings ratio of 73.23, which is 0.77x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
With a Price to Book ratio of 20.37, which is 2.33x the industry average, Broadcom might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
With a relatively high Price to Sales ratio of 26.54, which is 2.31x the industry average, the stock might be considered overvalued based on sales performance.
With a Return on Equity (ROE) of 11.02% that is 5.69% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $9.86 Billion, which is 0.25x below the industry average, potentially indicating lower profitability or financial challenges.
Compared to its industry, the company has lower gross profit of $12.25 Billion, which indicates 0.36x below the industry average, potentially indicating lower revenue after accounting for production costs.
The company's revenue growth of 28.18% is significantly below the industry average of 33.38%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
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.
When comparing Broadcom with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
When compared to its top 4 peers, Broadcom has a moderate debt-to-equity ratio of 0.8.
This implies that the company maintains a balanced financial structure with a reasonable level of debt and an appropriate reliance on equity financing.
Key Takeaways
The low P/E ratio suggests Broadcom is undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate a potential overvaluation. On the other hand, the high ROE and low EBITDA, gross profit, and revenue growth imply strong profitability but limited operational efficiency and growth potential when compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.