Switch to:
GuruFocus has detected 3 Warning Signs with Broadcom Ltd $AVGO.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Broadcom Ltd (NAS:AVGO)
Intrinsic Value: Projected FCF
$78.27 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Broadcom Ltd's projected FCF intrinsic value is $78.27. The stock price of Broadcom Ltd is $241.21. Therefore, Broadcom Ltd's Price to Intrinsic Value: Projected FCF Ratio of today is 3.1.

AVGO' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 1.72   Max: 3.08
Current: 3.08

1.72
3.08

During the past 10 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Broadcom Ltd was 3.08. The lowest was 1.72. And the median was 2.28.

AVGO's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
75% of the 457 Companies
in the Global Semiconductors industry.

( Industry Median: 1.54 vs. AVGO: 3.08 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Broadcom Ltd's FCF(6 year avg) is calculate as

Broadcom Ltd Quarterly Data

201410201501201504201507201510201601201604201607201610201701
total_freecashflow 1923194864444763344647311,1591,028
201204201207201210201301201304201307201310201401201404201407
total_freecashflow 1556314211814172155177178219
201104201107201110201201
total_freecashflow 23418715892

Add all the Free Cash Flow together and divide 6 will get Broadcom Ltd's FCF(6 year avg) = $1,287.33.

Broadcom Ltd's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Jan17)*0.8)/Shares Outstanding
=(14.8626533105*1287.33333333+19033*0.8)/439.000
=78.27

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Broadcom Ltd's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=241.21/78.2678565566
=3.08

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Broadcom Ltd Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
Projected FCF 0.000.000.000.000.000.0026.4235.1853.8275.32

Broadcom Ltd Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Projected FCF 35.1838.6442.8246.6653.8255.1168.6871.2375.3278.27
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK