We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Broadcom Inc. (AVGO) Up 1.6% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Broadcom Inc. (AVGO - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Broadcom Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Broadcom reported second-quarter fiscal 2024 non-GAAP earnings of $10.96 per share, beating the Zacks Consensus Estimate by 1.58% and increasing 6.2% year over year.
Net revenues increased 43% year over year to $12.48 billion, surpassing the Zacks Consensus Estimate by 3.71%. The upside can be attributed to VMware that contributed $2.7 billion in revenues for the second quarter, up from $2.1 billion in the prior quarter.
AI-related revenues surged 280% year over year to $3.1 billion, which was also a major driver of overall revenue growth.
Top-Line Details
Semiconductor solutions revenues (58% of net revenues) totaled $7.2 billion, up 6% year over year and beat the Zacks Consensus Estimate by 0.77%. The uptick was driven by the strong adoption among hyperscalers.
Networking revenues of $3.8 billion rose 44% year over year and contributed 53% to Broadcom’s semiconductor revenues. The company witnessed strong demand for its custom AI accelerators, networking switches, routers and Network Interface Card from hyperscale customers.
Storage connectivity revenues of $824 million contributed 11% to semiconductor revenues. It plunged 27% year over year.
Broadband revenues declined 39% year over year to $730 million and contributed 10% to semiconductor revenues. Wireless revenues of $1.6 billion contributed 22% to semiconductor revenues and were up 2% year over year.
Industrial resale revenues of $234 million declined 10% year over year.
Infrastructure software revenues (42% of net revenues) soared 175% year over year to $5.3 billion.
Bookings in the software segment grew from $1.9 billion in fiscal first quarter to $2.8 billion in fiscal second quarter, reflecting strong customer commitment and future revenue streams.
Operating Details
The non-GAAP gross margin was flat on a year-over-year basis to 76%.
Research and development, as a percentage of net revenues, increased 130 bps year over year to 12.3%. SG&A expenses increased 400 bps to 6.7%.
Adjusted EBITDA increased 31% year over year to $7.4 billion. The adjusted EBITDA margin contracted 560 bps on a year-over-year basis to 59.5%.
The non-GAAP operating margin contracted 470 bps year over year to 57.2%.
Balance Sheet & Cash Flow
As of May 5, 2024, cash and cash equivalents were $9.8 billion compared with $11.87 billion reported as of Feb 4, 2024.
Total debt (including the current portion of $2.42 billion) was $74 billion as of May 5, 2024, compared with $76 billion as of Feb 4, 2024.
Broadcom generated $4.58 billion cash flow from operations compared with $4.81 billion in the previous quarter. The free cash flow was $4.44 billion compared with $4.69 billion in the prior quarter.
AVGO announced a quarterly common stock dividend of $5.25 per share for the second quarter of fiscal 2024.
On Mar 29, 2024, the company paid out a cash dividend of $5.25 per share of common stock, totaling $2.44 billion.
Guidance
For fiscal 2024, the company expects revenues of $51 billion, including contribution from VMware, suggesting an increase of 42% from the prior-year reported levels.
Adjusted EBITDA is expected to be 61% of projected revenues.
AI revenues are expected to rise to more than $11 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Broadcom Inc. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Broadcom Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Broadcom Inc. belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Ambarella (AMBA - Free Report) , has gained 8.2% over the past month. More than a month has passed since the company reported results for the quarter ended April 2024.
Ambarella reported revenues of $54.47 million in the last reported quarter, representing a year-over-year change of -12.3%. EPS of -$0.26 for the same period compares with -$0.15 a year ago.
Ambarella is expected to post a loss of $0.19 per share for the current quarter, representing a year-over-year change of -26.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Ambarella. Also, the stock has a VGM Score of D.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Broadcom Inc. (AVGO) Up 1.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Broadcom Inc. (AVGO - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Broadcom Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Broadcom Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Broadcom reported second-quarter fiscal 2024 non-GAAP earnings of $10.96 per share, beating the Zacks Consensus Estimate by 1.58% and increasing 6.2% year over year.
Net revenues increased 43% year over year to $12.48 billion, surpassing the Zacks Consensus Estimate by 3.71%. The upside can be attributed to VMware that contributed $2.7 billion in revenues for the second quarter, up from $2.1 billion in the prior quarter.
AI-related revenues surged 280% year over year to $3.1 billion, which was also a major driver of overall revenue growth.
Top-Line Details
Semiconductor solutions revenues (58% of net revenues) totaled $7.2 billion, up 6% year over year and beat the Zacks Consensus Estimate by 0.77%. The uptick was driven by the strong adoption among hyperscalers.
Networking revenues of $3.8 billion rose 44% year over year and contributed 53% to Broadcom’s semiconductor revenues. The company witnessed strong demand for its custom AI accelerators, networking switches, routers and Network Interface Card from hyperscale customers.
Storage connectivity revenues of $824 million contributed 11% to semiconductor revenues. It plunged 27% year over year.
Broadband revenues declined 39% year over year to $730 million and contributed 10% to semiconductor revenues. Wireless revenues of $1.6 billion contributed 22% to semiconductor revenues and were up 2% year over year.
Industrial resale revenues of $234 million declined 10% year over year.
Infrastructure software revenues (42% of net revenues) soared 175% year over year to $5.3 billion.
Bookings in the software segment grew from $1.9 billion in fiscal first quarter to $2.8 billion in fiscal second quarter, reflecting strong customer commitment and future revenue streams.
Operating Details
The non-GAAP gross margin was flat on a year-over-year basis to 76%.
Research and development, as a percentage of net revenues, increased 130 bps year over year to 12.3%. SG&A expenses increased 400 bps to 6.7%.
Adjusted EBITDA increased 31% year over year to $7.4 billion. The adjusted EBITDA margin contracted 560 bps on a year-over-year basis to 59.5%.
The non-GAAP operating margin contracted 470 bps year over year to 57.2%.
Balance Sheet & Cash Flow
As of May 5, 2024, cash and cash equivalents were $9.8 billion compared with $11.87 billion reported as of Feb 4, 2024.
Total debt (including the current portion of $2.42 billion) was $74 billion as of May 5, 2024, compared with $76 billion as of Feb 4, 2024.
Broadcom generated $4.58 billion cash flow from operations compared with $4.81 billion in the previous quarter. The free cash flow was $4.44 billion compared with $4.69 billion in the prior quarter.
AVGO announced a quarterly common stock dividend of $5.25 per share for the second quarter of fiscal 2024.
On Mar 29, 2024, the company paid out a cash dividend of $5.25 per share of common stock, totaling $2.44 billion.
Guidance
For fiscal 2024, the company expects revenues of $51 billion, including contribution from VMware, suggesting an increase of 42% from the prior-year reported levels.
Adjusted EBITDA is expected to be 61% of projected revenues.
AI revenues are expected to rise to more than $11 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Broadcom Inc. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Broadcom Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Broadcom Inc. belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Ambarella (AMBA - Free Report) , has gained 8.2% over the past month. More than a month has passed since the company reported results for the quarter ended April 2024.
Ambarella reported revenues of $54.47 million in the last reported quarter, representing a year-over-year change of -12.3%. EPS of -$0.26 for the same period compares with -$0.15 a year ago.
Ambarella is expected to post a loss of $0.19 per share for the current quarter, representing a year-over-year change of -26.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Ambarella. Also, the stock has a VGM Score of D.