In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Broadcom ( AVGO ) vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in the industry.

Broadcom Background

Broadcom ( AVGO ) is the sixth-largest semiconductor company globally and has expanded into various software businesses, with over $30 billion in annual revenue. It sells 17 core semiconductor product lines across wireless, networking, broadband, storage, and industrial markets. It is primarily a fabless designer but holds some manufacturing in-house, like for its best-of-breed FBAR filters that sell into the Apple iPhone. 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 ( AVGO ) and Avago Technologies in chips, as well as Brocade, CA Technologies, and Symantec in software.

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Through a meticulous analysis of Broadcom ( AVGO ), we can observe the following trends:

At 71.5, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.16x, suggesting a premium valuation relative to industry peers.

With a Price to Book ratio of 11.04, which is 1.2x the industry average, Broadcom ( AVGO ) 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 17.5, which is 1.63x the industry average, the stock might be considered overvalued based on sales performance.

The company has a lower Return on Equity (ROE) of 3.02%, which is 1.58% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.58 Billion is 0.21x below the industry average, suggesting potential lower profitability or financial challenges.

Compared to its industry, the company has lower gross profit of $7.78 Billion, which indicates 0.37x below the industry average, potentially indicating lower revenue after accounting for production costs.

The company is experiencing remarkable revenue growth, with a rate of 42.99%, outperforming the industry average of 12.33%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.

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 ( AVGO ) with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:

Among its top 4 peers, Broadcom ( AVGO ) has a higher debt-to-equity ratio of 1.06.

This suggests a greater reliance on debt financing, which can expose the company to increased financial risk and potential volatility.

Key Takeaways

For Broadcom ( AVGO ), the PE, PB, and PS ratios are all high compared to its peers in the Semiconductors & Semiconductor Equipment industry, indicating that the stock may be overvalued. On the other hand, the low ROE, EBITDA, and gross profit, coupled with high revenue growth, suggest that Broadcom ( AVGO ) may be facing challenges in generating profits efficiently and managing costs effectively relative to its industry competitors.

This article was generated by Benzinga's automated content engine and reviewed by an editor.