Broadcom Q4 Earnings Preview: AVGO Up 10.7% Since Last Report

in EARNINGS/INVESTING IDEAS by

Broadcom Inc. (NASDAQGS:AVGO) is scheduled to report Q4 earnings results on December 12, 2019. Broadcom’s management plan to host a conference call at 2:00 p.m. Pacific Time on the same day to provide additional color on results and business outlook.

The company is expected to report earnings of $5.40/share on revenue of $5.699 billion. The consensus earnings per share (EPS) of $5.40/share is based on a poll of 28 analysts and represents a decline of -7.7% over the same quarter last year when the company reported earnings of $5.85/share.

The revenue forecast of $5.699 billion based on a poll of 24 analysts implies a year-over-year (YoY) growth of 4.6%. Last year the company reported $5.448 billion in revenue for the quarter.

Expected to report EPS decline of -$0.45/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $5,699.50 $5,448.00 4.6%
EPS $5.40 $5.85 -7.7%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance. What are your expectations from Broadcom for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $5.09 $5.16 1.3% Beat
Q2, 2019 $5.15 $5.21 1.2% Beat
Q1, 2019 $5.20 $5.55 6.7% Beat
Q4, 2018 $5.59 $5.85 4.7% Beat
Q3, 2018 $4.81 $4.98 3.5% Beat
Q2, 2018 $4.76 $4.88 2.5% Beat
Q1, 2018 $5.10 $5.12 0.4% Beat
Q4, 2017 $4.50 $4.59 1.9% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending August 4, 2019, the stock price reacted by falling by -2.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-09-12 $298.01 $290.32 -2.6% Decline
2019-06-13 $279.73 $265.93 -4.9% Decline
2019-03-14 $271.21 $290.29 7.0% Increase
2018-12-06 $232.04 $228.56 -1.5% Decline

Fundamentals And Technical Analysis

Broadcom is currently trading at $319.72/share, up 1.5% for the day. The company is trading near its 52-week high of $325.67/share. The company’s stock price is up 10.1% since the last earnings report and up 2.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 60.86 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 41.7x and a forward P/E multiple of 13.4x. Broadcom’s current share price also implies a price-to-book (P/B) multiple of 5.8x. The following table summarizes some other key fundamental ratios:

Data as of December 11, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date August 4, 2019
Stock Price (Current) $319.72
P/E Ratio 41.7x
P/E Ratio (Fwd) 13.4x
PEG Ratio 1.5
Total Debt to Capital (%) 23.1%
Levered Free Cash Flow $9.411 billion
Enterprise Value / EBITDA 15.3x

Source: Finbox

Company Profile: Broadcom Inc.

Broadcom Inc. is a large-cap stock with a market capitalization of $126.8 billion and a total enterprise value of $158.9 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

Broadcom Inc. designs, develops, and supplies a range of 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 through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other.

The Wired Infrastructure segment provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; Ethernet switching and routing application-specific standard products; embedded processors and controllers; serializer/deserializer application-specific integrated circuits; optical and copper, and physical layers; and fiber-optic laser and receiver components.

The Wireless Communications segment offers RF front end modules, filters, and power amplifiers; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; and custom touch controllers.

The Enterprise Storage segment provides serial attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express switches; fiber channel host bus adapters and switches; read channel based SoCs; custom flash controllers; and preamplifiers.

The Industrial & Other segment offers optocouplers, industrial fiber optics, motion control encoders, and subsystems, and light-emitting diodes. The company’s 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. is headquartered in San Jose, California.

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