Broadcom Ltd. (AVGO), the U.S. global supplier of analog and digital semiconductors headquartered in Singapore, will release its financial results for the third quarter of fiscal 2017 on Aug. 24 after market close.
The company, which is also a designer and developer of the aforementioned technologies, operates in the wired infrastructure and wireless communication markets as well as in the enterprise storage and industrial markets.
For the third quarter of fiscal 2017, analysts forecast that Broadcom will generate an EPS, a non-GAAP measure of income from ongoing operations, of $4.03 on average. Analysts’ estimates on earnings range between a low of $4 and a high of $4.11.
Source: Yahoo Finance
The average EPS is a mean of 30 estimates from analysts who were surveyed and represents a 39.4% increase from the comparable of fiscal 2016 when the company reported an EPS of $2.89.
Concerning third-quarter revenue, the average analyst forecasts a figure of $4.46 billion, which represents a 17.20% growth from revenue of one year ago.
Source: Yahoo Finance
The estimates on revenue for the third quarter of fiscal 2017 range between a low of $4.44 billion and a high of $4.53 billion.
Broadcom has approximately $4.45 billion in cash on hand and securities as of the second quarter of fiscal 2017 while the total debt amounts to $13.567 billion.
The total debt to equity (MRQ) ratio is 69.84 versus an industry average of 21.79, according to reuters.com. Therefore, Broadcom is more leveraged than its peers although it doesn’t have any difficulties paying interest expenses on the outstanding debt since the interest coverage ratio – computed over the last 12 months time frame – is 1.8. This is still above the threshold of 1.5 as commonly accepted by investors.
Concerning Broadcom’s ability to meet its short-term obligations, the American supplier of semiconductors is better positioned than the industry since its quick ratio is 3.49 versus an industry average of 2.44 and its current ratio is 4.13 versus an industry average of 3.05.
GuruFocus gives Broadcom a financial strength rating of 5 out of a total of 10.
The stock is trading at $255.19 per share with a price-earnings (P/E) ratio of -405.71, a price-book (P/B) ratio of 5.35 and a price-sales (P/S) ratio of 6.75.
The forward P/E ratio is 14.93. When this ratio is combined with an EPS of $15.77 – as forecasted by analysts for full fiscal 2017 – it yields to a value per share of $235.45 making Broadcom look overvalued by the stock market according to the current share prices. At the moment Broadcom is also trading close to its 52-week high of $258.49 per share. The technology stock’s 52-week low is $158.75.
Analysts suggest buying shares of Broadcom with an average target price of $273.81 per share, which represents only a 7.3% upside from the current share price. The recommendation rating for Broadcom is 1.7 out of 5. Broadcom gained 44.4% year to date on the Nasdaq stock exchange.
Analysts forecast Broadcom’s earnings will grow 8.60% from fiscal 2017 to fiscal 2018, while over the next five years the company’s earnings are forecasted to grow 18.20% on average every year.
GuruFocus gives Broadcom a profitability and growth rating of 8 out of 10.
Broadcom distributes an annual dividend of $4.08 per share through quarterly payments of $1.02 per share, for a dividend yield of 1.63%.
Disclosure: I have no position in Broadcom.
