At US$316, Is Broadcom Inc. (NASDAQ:AVGO) Worth Looking At Closely?
Today we're going to take a look at the well-established Broadcom Inc. (NASDAQ:AVGO). The company's stock had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of US$299 to US$328. However, is this the true valuation level of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Broadcom’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Broadcom
What is Broadcom worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.7% below my intrinsic value, which means if you buy Broadcom today, you’d be paying a fair price for it. And if you believe that the stock is really worth $331.25, then there’s not much of an upside to gain from mispricing. In addition to this, Broadcom has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Broadcom generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Broadcom’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? AVGO’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on AVGO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Broadcom. You can find everything you need to know about Broadcom in the latest infographic research report. If you are no longer interested in Broadcom, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
