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GuruFocus has detected 3 Warning Signs with Broadcom Ltd $AVGO.
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Broadcom Ltd (NAS:AVGO)
Median PS Value
$149.27 (As of Today)

This valuation method assumes that the stock valuation will revert to its historical mean in terms of Price/Sales Ratio. The reason we use P/S Ratio instead of P/E Ratio or P/B Ratio is because Price/Sales Ratio is independent of profit margin, and can be applied to a broader range of situations.

Median P/S Value is calculated as trailing twelve months (TTM) revenue per share times 10-Year median P/S ratio. Broadcom Ltd's revenue per share for the trailing twelve months (TTM) ended in Jan. 2017 was $36.812. Broadcom Ltd's 10-Year median P/S ratio is 4.06. Therefore, the Median P/S Value for today is $149.27.

As of today, Broadcom Ltd's share price is $240.86. Broadcom Ltd's median P/S value is $149.27. Therefore, Broadcom Ltd's Price to Median P/S Value Ratio for today is 1.61.

AVGO' s Price-to-Median-PS-Value Range Over the Past 10 Years
Min: 0.55   Max: 1.62
Current: 1.61

0.55
1.62

During the past 10 years, the highest Price to Median P/S Value Ratio of Broadcom Ltd was 1.62. The lowest was 0.55. And the median was 0.95.

AVGO's Price-to-Median-PS-Value is ranked lower than
65% of the 750 Companies
in the Global Semiconductors industry.

( Industry Median: 1.17 vs. AVGO: 1.61 )

Definition

Broadcom Ltd's Median P/S Value for today is calculated as

Median P/S Value=Total Annual Sales / Shares Outstanding*10-Year Median P/S Ratio
=Revenue per Share (TTM)*10-Year Median P/S Ratio
=36.812*4.06
=149.46

10-Year Median P/S Ratio is 4.06.
Broadcom Ltd's revenue per share for the trailing twelve months (TTM) ended in Jan. 2017 was 8.533 (Apr. 2016 ) + 9.05 (Jul. 2016 ) + 9.801 (Oct. 2016 ) + 9.428 (Jan. 2017 ) = $36.812.

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


Explanation

This valuation method assumes that the stock valuation will revert to its historical mean in terms of Price/Sales Ratio. The reason we use P/S Ratio instead of P/E Ratio or P/B Ratio is because Price/Sales Ratio is independent of profit margin, and can be applied to a broader range of situations.

It also assumes that over time the profit margin is constant. If a company increases its profit margin to a sustainable level, this value might under-estimate its value. If it has permanent declined profit margins, this may over-estimate the company’s value.

Broadcom Ltd's Price to Median P/S Value Ratio for today is calculated as

Price to Median P/S Value=Share Price/Median P/S Value
=240.86/149.46
=1.61

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


Related Terms

P/E Ratio, P/B Ratio, P/S Ratio, Intrinsic Value (DCF Projected), Intrinsic Value (DCF), Intrinsic Value (DE), Graham Number, GAVA


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
medpsvalue 0.0029.8327.1434.5237.7438.4740.4966.3398.44135.89

Broadcom Ltd Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
medpsvalue 66.3378.9090.9395.0298.4499.44111.00123.18135.89149.27
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