Stock Analysis on Net

Broadcom Inc. (NASDAQ:AVGO)

Price to FCFE (P/FCFE) 

Microsoft Excel

Free Cash Flow to Equity (FCFE)

Broadcom Inc., FCFE calculation

US$ in millions

Microsoft Excel
12 months ended: Nov 3, 2024 Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Nov 1, 2020 Nov 3, 2019
Net income 5,895 14,082 11,495 6,736 2,960 2,724
Net noncash charges 18,704 5,646 6,895 7,155 8,008 7,157
Changes in assets and liabilities, net of acquisitions and disposals (4,637) (1,643) (1,654) (127) 1,093 (184)
Net cash provided by operating activities 19,962 18,085 16,736 13,764 12,061 9,697
Purchases of property, plant and equipment (548) (452) (424) (443) (463) (432)
Proceeds from long-term borrowings 39,954 1,935 9,904 27,802 28,793
Payments on debt obligations (19,608) (403) (2,361) (11,495) (18,814) (16,800)
Other borrowings, net (1,285) 1,241
Free cash flow to equity (FCFE) 39,760 17,230 15,886 11,730 19,301 22,499

Based on: 10-K (reporting date: 2024-11-03), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-11-01), 10-K (reporting date: 2019-11-03).


Net Cash Provided by Operating Activities
The net cash provided by operating activities shows a consistent upward trend over the six-year period. Starting from $9,697 million in 2019, the figure increased steadily each year, reaching $19,962 million by 2024. This steady growth indicates an improving cash generation capability from the company's core operations over time.
Free Cash Flow to Equity (FCFE)
The free cash flow to equity exhibits a more variable pattern compared to operating cash flow. It started at a high level of $22,499 million in 2019, then declined to $19,301 million in 2020, followed by a more pronounced decrease to $11,730 million in 2021. After this decline, FCFE recovered to $15,886 million in 2022 and $17,230 million in 2023. Notably, there is a substantial increase to $39,760 million in 2024, more than doubling the previous year's figure. This significant jump in 2024 suggests a major positive shift in the company's cash available to equity holders, which may be due to improved operational cash flow, reduced capital expenditures, changes in financing activities, or other strategic financial decisions.
Overall Insights
The consistent increase in operating cash flow coupled with the fluctuating but ultimately substantially increasing FCFE toward the end of the period suggests stronger cash generation and improved financial flexibility. The marked increase in FCFE for 2024 could imply enhanced efficiency in capital management or a one-time event positively affecting cash flows. Overall, the data reflects improving liquidity and potential for increased shareholder value distribution in the most recent year.

Price to FCFE Ratio, Current

Broadcom Inc., current P/FCFE calculation, comparison to benchmarks

Microsoft Excel
No. shares of common stock outstanding 4,703,470,979
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in millions) 39,760
FCFE per share 8.45
Current share price (P) 275.18
Valuation Ratio
P/FCFE 32.55
Benchmarks
P/FCFE, Competitors1
Advanced Micro Devices Inc. 135.11
Analog Devices Inc. 32.86
Applied Materials Inc. 18.97
Intel Corp.
KLA Corp. 32.46
Lam Research Corp. 31.60
Micron Technology Inc.
NVIDIA Corp. 65.23
Qualcomm Inc. 17.21
Texas Instruments Inc. 50.61
P/FCFE, Sector
Semiconductors & Semiconductor Equipment 76.73
P/FCFE, Industry
Information Technology 46.25

Based on: 10-K (reporting date: 2024-11-03).

1 Click competitor name to see calculations.

If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.


Price to FCFE Ratio, Historical

Broadcom Inc., historical P/FCFE calculation, comparison to benchmarks

Microsoft Excel
Nov 3, 2024 Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Nov 1, 2020 Nov 3, 2019
No. shares of common stock outstanding1 4,687,356,156 4,681,405,690 4,178,861,400 4,128,739,680 4,067,131,180 3,977,922,890
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in millions)2 39,760 17,230 15,886 11,730 19,301 22,499
FCFE per share3 8.48 3.68 3.80 2.84 4.75 5.66
Share price1, 4 220.79 110.65 55.59 63.50 43.46 31.90
Valuation Ratio
P/FCFE5 26.03 30.06 14.62 22.35 9.16 5.64
Benchmarks
P/FCFE, Competitors6
Advanced Micro Devices Inc. 109.67 241.70 33.46 44.72 133.51
Analog Devices Inc. 29.30 22.28 24.14 34.67 33.98 37.52
Applied Materials Inc. 17.05 17.53 19.17 27.20 23.21 19.53
Intel Corp. 14.25 8.57
KLA Corp. 25.11 26.78 9.01 28.05 19.15 9.84
Lam Research Corp. 25.89 18.67 24.95 34.58 16.89 6.14
Micron Technology Inc. 18.66 37.24 81.71 13.92
NVIDIA Corp. 65.45 151.07 54.83 35.22 44.24
Qualcomm Inc. 18.57 11.97 19.13 17.93 34.91 16.39
Texas Instruments Inc. 42.96 37.61 23.88 21.87 24.10
P/FCFE, Sector
Semiconductors & Semiconductor Equipment 45.81 47.55 29.02 24.87 17.64
P/FCFE, Industry
Information Technology 36.66 33.16 26.84 27.24 23.37

Based on: 10-K (reporting date: 2024-11-03), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-11-01), 10-K (reporting date: 2019-11-03).

1 Data adjusted for splits and stock dividends.

2 See details »

3 2024 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 39,760,000,000 ÷ 4,687,356,156 = 8.48

4 Closing price as at the filing date of Broadcom Inc. Annual Report.

5 2024 Calculation
P/FCFE = Share price ÷ FCFE per share
= 220.79 ÷ 8.48 = 26.03

6 Click competitor name to see calculations.


Share Price Trends
The share price demonstrated a consistent upward trend over the analyzed periods. Starting at $31.9 in 2019, it increased steadily to $43.46 in 2020 and further to $63.5 in 2021. A slight decline occurred in 2022 with the price dropping to $55.59, which was followed by a significant increase in 2023 to $110.65, and then doubling again in 2024 to reach $220.79. This pattern indicates a strong overall market appreciation and investor confidence in the asset over the six-year span.
Free Cash Flow to Equity (FCFE) per Share
FCFE per share exhibited fluctuating behavior throughout the periods under review. The value started at $5.66 in 2019 and then declined to $4.75 in 2020, continuing a downward trend to $2.84 in 2021. A recovery phase occurred in 2022 with an increase to $3.8, followed by a slight dip to $3.68 in 2023. Notably, there was a substantial rise in 2024, where FCFE per share climbed to $8.48, representing the highest level in the period analyzed, suggesting improved cash-generating efficiency or profitability at the equity level in the latest year.
Price to FCFE Ratio (P/FCFE)
The P/FCFE ratio experienced considerable volatility. Initially, it was relatively low at 5.64 in 2019, implying a modest price relative to free cash flow. However, the ratio escalated sharply to 9.16 in 2020 and then more than doubled to 22.35 in 2021. It decreased somewhat to 14.62 in 2022 before surging again to 30.06 in 2023. A slight decline to 26.03 occurred in 2024 but still remained at an elevated level compared to earlier years. This fluctuation suggests changing investor sentiment and valuation multiples, likely influenced by the interplay between share price increases and FCFE per share performance. The high ratios in later years reflect strong market valuation possibly detached from cash flow growth trends in some years, indicating potentially elevated market expectations or reduced FCFE growth in those periods.
Overall Insights
The data reveals a strong increase in market valuation as represented by the share price and P/FCFE ratio, especially notable from 2022 onward. While FCFE per share showed some volatility and decline in the early years, it recovered significantly in the most recent year, which may partly justify the high valuation. However, the sustained high P/FCFE ratios suggest that investors have placed a premium on the stock, potentially anticipating future growth or improved performance beyond the reported FCFE figures. The divergence between equity cash flows and market valuation may warrant further investigation into underlying business performance drivers and market conditions affecting investor expectations.