Performance Comparison: Broadcom And Competitors In Semiconductors & Semiconductor Equipment Industry

In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Broadcom (NASDAQ:AVGO) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight 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	68.35	18.94	24.77	11.02%	$8.29	$10.7	12.93%
NVIDIA Corp	42.31	34.94	22.45	29.14%	$38.75	$41.85	62.49%
Taiwan Semiconductor Manufacturing Co Ltd	28.65	9.01	12.40	9.44%	$691.11	$588.54	30.31%
Advanced Micro Devices Inc	103.72	5.31	10.10	2.06%	$2.11	$4.78	35.59%
Micron Technology Inc	21.44	4.32	6.02	6.1%	$5.9	$5.05	46.0%
Qualcomm Inc	34.40	8.70	4.30	-12.88%	$3.51	$6.24	10.03%
Intel Corp	600.83	1.62	2.97	3.98%	$7.85	$5.22	2.78%
Texas Instruments Inc	31.78	9.54	9.25	8.21%	$2.24	$2.72	14.24%
Analog Devices Inc	59.44	3.92	12.22	2.32%	$1.47	$1.94	25.91%
ARM Holdings PLC	146.90	16.41	27.68	3.3%	$0.22	$1.11	34.48%
Marvell Technology Inc	28.77	4.93	9.11	13.84%	$2.58	$1.07	36.83%
NXP Semiconductors NV	27.59	5.59	4.72	6.43%	$1.11	$1.79	-2.37%
Monolithic Power Systems Inc	23.40	12.25	16.50	5.12%	$0.21	$0.41	18.88%
ASE Technology Holding Co Ltd	29.84	3.18	1.62	3.56%	$32.4	$28.88	5.29%
First Solar Inc	19.50	3.02	5.41	5.19%	$0.61	$0.61	79.67%
Credo Technology Group Holding Ltd	115.63	18.84	32.18	7.99%	$0.09	$0.18	272.08%
STMicroelectronics NV	44.05	1.27	2.02	1.33%	$0.31	$1.06	-1.97%
ON Semiconductor Corp	73.05	2.71	3.60	3.22%	$0.44	$0.59	-11.98%
United Microelectronics Corp	14.84	1.75	2.63	4.29%	$30.07	$17.62	-2.25%
Tower Semiconductor Ltd	65.05	4.43	8.43	1.9%	$0.13	$0.09	6.79%
Lattice Semiconductor Corp	359.30	13.91	20.06	0.4%	$0.01	$0.09	4.92%
Rambus Inc	43.15	7.57	14.53	3.84%	$0.08	$0.14	22.68%
Average	91.13	8.25	10.87	5.18%	$39.1	$33.81	32.88%

When conducting a detailed analysis of Broadcom, the following trends become clear:

• A Price to Earnings ratio of 68.35 significantly below the industry average by 0.75x suggests undervaluation. This can make the stock appealing for those seeking growth.

• With a Price to Book ratio of 18.94, which is 2.3x 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.

• The Price to Sales ratio of 24.77, which is 2.28x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The Return on Equity (ROE) of 11.02% is 5.84% above the industry average, highlighting 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.

• With lower gross profit of $10.7 Billion, which indicates 0.32x below the industry average, the company may experience lower revenue after accounting for production costs.

• The company's revenue growth of 12.93% is significantly lower compared to the industry average of 32.88%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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:

• Broadcom is positioned in the middle in terms of the debt-to-equity ratio compared to its top 4 peers.

• This suggests a balanced financial structure, where the company maintains a moderate level of debt while also relying on equity financing with a debt-to-equity ratio of 0.8.

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 that the market values the company's assets and sales more favorably. On the other hand, the high ROE and low EBITDA, gross profit, and revenue growth imply that Broadcom is efficiently utilizing its equity but may be facing challenges in generating profits and revenue growth relative to its industry counterparts.

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