Broadcom
Shares are up 33% from their mid-October low. This has helped it significantly pare its YTD loss to a more reasonable 16% from 38% at its nadir. The company is an integral player in the global semiconductor market and has benefitted from the growth in cloud computing, machine learning, AI, etc. It also continues to post impressive growth despite so many tech companies failing to do so in this tough environment. It's also attractive from a valuation standpoint with a forward P/E of 12.8 and a dividend yield of 3%.
Inside the Numbers
In its fiscal Q4, Broadcom reported $10.45 in earnings per share which exceeded analysts' estimates of $10.31 per share. Revenue also was slightly higher than estimates at $8.9 billion vs $8.8 billion. Overall, earnings were up by 34% and revenue was up by 21%.
The biggest factor in its strength was networking and server storage. Semiconductor solutions revenue accounted for 79.4% of total revenue and was up 25% as enterprise spending remained resilient. Networking revenue was up 30% due to the deployment of its Tomahawk 4 switches. Storage connectivity revenue was up 50% due to strong growth of its new MegaRAID storage adapters.
Another positive from the report was an expansion of gross margins to 74.7%. The company also increased its dividend by 12%. Overall in its fiscal year, the company spent $15.5 billion total in buybacks and dividends.
Next quarter, Broadcom is forecasting $8.9 billion in revenue which translates into 20% growth. It sees the same growth trends of Q4 persisting in Q1, specifically with server storage revenue forecast to grow by more than 50%.
Overall, Broadcom remains one of the top semiconductor stocks and one of the most attractive large-cap stocks from a growth and value perspective.
