Does AVGO Have a higher intrinsic value than its stock price, does it have a good PE and PS rating?
8/9/2024 09:06am
**Broadcom Inc. (AVGO) does not appear to have a higher intrinsic value than its stock price**. Here's the analysis:
1. **Intrinsic Value Assessment**:
- The intrinsic value of Broadcom under the Base Case scenario is $115.05, which is lower than the current market price of $143.92.
- The projected FCF intrinsic value is $53.30, which is also below the current stock price.
|Ticker|Name|Total Revenue year-on-year growth rate|Price to Book Ratio|P/S|P/E(TTM)|Net Income|Basic EPS|Date|code|market_code|
|---|---|---|---|---|---|---|---|---|---|---|
|AVGO.O|Broadcom|42.98637352570709||||2.121E9|4.56|20240630|AVGO|185|
|AVGO.O|Broadcom|||13.874401919739855|66.0375|||20240808|AVGO|185|
|AVGO.O|Broadcom|||||||20240809|AVGO|185|
2. **Valuation Metrics**:
- The P/E (TTM) ratio is 66.04, which is quite high and suggests that the stock is overvalued.
- The P/B ratio is 8.86, indicating that the stock is trading at a premium to its book value.
- The P/S ratio (TTM) is 13.87, which is reasonable but does not indicate an undervaluation.
3. **Market Performance and Investor Sentiment**:
- The stock has a 42.99% total revenue year-on-year growth rate, which is impressive but does not necessarily indicate a high intrinsic value.
- The company's Intrinsic Value: Projected FCF is $53.30, suggesting that the current stock price is overvalued by approximately $90.53.
4. **Comparison with Peers**:
- Broadcom's P/E ratio is higher than the industry average, which could suggest that the stock is overvalued compared to its peers.
- The P/S ratio is within the range of the industry median, which does not provide a clear indication of whether the stock is undervalued or overvalued relative to its sales.
In conclusion, while Broadcom has strong revenue growth and a high P/S ratio, the high P/E ratio and the discrepancy between the intrinsic value and the market price suggest that the stock is overvalued. Investors should consider these metrics in conjunction with their own investment criteria and market conditions before making investment decisions.