Should You Buy Broadcom Stock After the Stock Split Announcement? | AVGO Stock Analysis

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브로드컴 실적 발표: 매출 124.87억달러(+43%, VMware 포함), 순이익 21.21억달러, AI 매출 31억달러 기록으로 2024 연간 가이던스 510억달러로 상향. 실적 후 주가 16% 상승. 10:1 액면분할 발표. 전 실적 발표 전 매수 추천은 유지하되 실적 전 매수 자제 권고. 현재 선행 PER 약 25.9배로 3년래 최고 밸류에이션이라 매수 여부는 신중하게 접근.

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01. hey everyone broadcom reported higher more than 16% following the release I'll review those financial figures and I'll update my buy recommendation for broadcom stock coming into the quarter I had broadcom stock rated as a buy but I also told investors not to buy before earnings so I want to clarify those recommendations update the recommendation on broadcom stock and let you know if I think the stock is a buy hold or sell following about a week ago I released this video asking should you buy broadcom stock before June 12 and that was meant to say should you buy it before the earnings release and in the video I talked about how X excellent broadcom's businesses strong profit margin excellent Revenue growth the company knows what it's doing all of which are reasons why I had the stock recommended as a buy but I also told investors in this video not to buy the stock right before earnings and my reasoning for that was because stocks are volatile in the day after the earnings release in the moments before and after the earnings release and I didn't want to have in investors buy or sell in a moment with extra volatility it's already risky making investments in the stock market investing in those days is even more risky so you're taking on more volatility investing before and earnings release because then the stock price moves largely following the announcement as you're noticing here so this is one of the situations where the price moved violently higher right a big jump higher following the earnings release the stock price is up 16% in the moments after but there are situations where it goes in the opposite direction so it's extra risk because there's a lot of information embedded into the valuation going into the earnings release and then when the earnings come out the price adjusts to the new information that's why I usually suggest waiting until after the earnings release come out to digest the new information and then make an investment decision after sure you'll miss out on some of these huge price gains but you'll also miss out on some of the downside events as well so you basically lower your risk and you lower the potential reward but I think it's worthwhile in most cases there are rare cases where I do still recommend buying before the earnings release and those are cases where I feel the stock price heading into the earnings release is so undervalued that there's enough margin of safety to justify a buy recommendation I did not feel that way with broad comp I did not feel broad comp stock was undervalued enough heading into the earnings release and you can see broad comp stock when I'm looking at it now on the forward price to earnings ratio it's near the highest it's been going back to July of 2021 and so that's why I didn't feel the stock was undervalued enough to recommend before the earnings release but let's take a look at the results and let's see if it's a buy after the earnings release so Broad comra reporting 12.48 7 billion in Revenue which was up 43% from the same quarter the prior year but remember these results include revenue from VMware which it recently acquired which were not included in its results the same quarter last year so it makes its Revenue growth look better than it was organically organic Revenue growth was still solid but not as solid as including VMware which I'll share with you a little bit later Gap net income of 2121 billion was solid net profit margin when you divide net income by Revenue that will give you the net profit margin cash flow from operations is a more informative metric to consider in this particular report because of the disruptions from including vmware's results with broadcom's results in the current quarter cash flow from operations 4.58 billion in the C quarter divided by 12.48 7 billion will give you a solid cash flow from operations to sales metric fiscal 2024 annual revenue guidance was upgraded to 51 billion and these will include VMware results and that would be an increase of 42% from the same quarter the prior year I'm sorry for the same fiscal year in 2023 now companies saying that revenue from their AI products was a record 3.1 billion during the quarter and that caused them to raise their 2024 guidance to 51 billion and adjusted IA of 61% of Revenue those are very solid profit margins broadcom is one of the most profitable businesses in the world in terms of operating profit margin and it looks like those Trends will continue for broadcom for the rest of 2024 now if you exclude the results from VMware Revenue was still up a solid 12% year-over-year this is excluding the impacts from BMW of course you're probably reading headlines already broadcom announcing a stock split this was one a lot of investors were speculating would do a stock split because the stock price was getting expensive and so today they are announcing a 10 for one forward stock split just like Nvidia Nvidia also did a 10 for one stock split to make ownership of broadcom stock more accessible to investors and employees so looking at the details of the stock split stockholders of record as of the close of Market on July 11 will receive additional nine shares of common stock for each share held after the close of Market on July 12 at market open on July 15 trading ex is expected to commence on a split adjusted basis so if you want to participate in the stock split you'll have have to buy your shares before the stock closes trading on July 11 before the close of Market on July 11 and then the stock will trade on a split adjusted basis on July 15 so if you want to get the lower priced shares you'll be able to get those on July 15 when trading opens so do I think broadcom stock is a buy it's now trading at a forward price to earn earnings of 25.858223 profit margin are excellent but also the stock is trading at the highest valuation it's traded for in the last three years so a bit of a give and take there for broadcom yes excellent profit margins excellent business but the valuation already accounts for most or a majority of those excellent prospects going forward and if you've been following my channel you know my views of a stock split and how it'll impact my opinion on the investment and you'll know that a stock split does not change how I view a stock one way or another it has no impact on my valuation of a stock it's just taking one slice of pizza and splitting it into 10 slices I don't see that as having any material impact on the company's revenue on its profit on its cash flow sure it'll make the shares more affordable to a broader population but that's not going to change the company's Revenue its profits or its cash flow which is the thing that I consider when I'm making an investment decisio