Buy Semiconductor Stock? Broadcom Stock Analysis - is AVGO a Good Buy Today?

요약 보기

브로드컴(AVGO)의 사업구조(반도체 솔루션 약 3/4, 인프라 소프트웨어 약 28%, 2019년 Symantec 인수 영향)를 설명하고, 2014~2020년 잉여현금흐름 추정치 대비 실적과 할인현금흐름(DCF) 모델을 근거로 적정가치를 약 645달러로 제시. 당시 주가 약 560달러 대비 약 15% 상승여력이 있어 매수 매력이 크다고 평가. 다만 개인 포트폴리오 편입 여부는 유보하고 자사 유료 커뮤니티 홍보로 마무리.

다듬은 글

※ 자동 자막 원문(다듬기 전)

01. hi i'm jimmy in this video we're looking at broadcom ticker symbol avgo so we're going to look quickly at broadcom's business and then we're going to see if we can come up with a fair value for broadcom stock using discounted free cash flow and ultimately we're trying to see if this is worth adding to our investment portfolios today okay so let's jump right into this so this is broadcom segments based on their 2020 revenue and we can see that their semiconductor solutions segment well this accounted for nearly three quarters of all of their revenue in 2020.

02. so this segment produces a ton of different products everything from set-top boxes to broadcom motor modems to routers ethernet switches uh fiber optic parts led led lights the list goes on and on and then they have their infrastructure software segment right now the infrastructure software segment accounts for about 28 of revenue and just a few years ago just to illustrate back in 2018 well this segment accounted for just nine percent of total revenue we might ask why the big jump well in 2019 broadcom bought symantec the symantec business from another company this was their enterprise security part of their business and broadcom paid about 10.7 billion dollars for it at that time the revenue generated from symantec ultimately lands in this segment which is one of the reasons they saw a jump from nine percent to 28 last year okay now as far as what this segment brings to the table well this segment provides uh mainframe software uh business operations technology cyber security which is where symantec came into the whole thing and again the list goes on and on so broadly speaking in my opinion it seems that broadcom is well diversified and well positioned for the future the world is heading to pl to a place where there's going to be the types of products that broadcom makes in so many end products so i think broadcom is well positioned for the at least the foreseeable future okay now let's look at a bit of the numbers i think a logical place for us to start is with broadcom's revenue so when we look at their revenue over the past few years well we can see they've had some fantastic growth recently but this was really kicked off in 2016 when avago technologies bought broadcom for about 37 billion dollars now at that time this is one of the largest semiconductor deals ever but really what it did for today's broadcom is it took bro it took broadcom's strength at that time which was engineering and it took avagos management team which had a reputation for being highly efficient especially around the integration of new acquisitions and clearly it looks like this combo works because we can see that revenue really began to skyrocket after the two companies got together plus this growth has sort of been in line with the man avago's management team's strengths of acquisition so we already saw that in 2019 they acquired symantec but on top of that in 2018 broadcom acquired ca technologies in 2017 they acquired brocade communications so i think that the proof is really in the pudding here that broadcom's ability to acquire companies and use that to keep growth going seems to be working that being said let's take a peek at broadcom's free cash flow and see if we can come up with a fair value for broadcom stock using discounted free cash flow so this is a chart of broadcom's free cash flow going back to 2014 and this also includes the next three years of analyst estimates those are the green bars but here's why i went back to 2014.

03. so our question is do we believe that these analyst estimates are reasonable estimates if we can believe those numbers well that makes leaning on our fair value calculation using discounted free cash flow even more important more even more reliable so i went back to 2014 because i was able to find analyst estimates for free cash flow going back to 2014 and interestingly in 2014 management broadcom's management team came up a bit short of analyst estimates when it came to free cash flow they missed again in 2015 missed again in 2016 and then in 2017 which was the first full year that broadcom's new management team after coming out of the avago deal well that was their first full year and in that year they actually missed again slightly and in 2018 broadcom beat analyst estimates for free cash flow they beat again in 2019 and in their last full year which was 2020 once again they beat expectations now i'm not suggesting that this is telling us that they will beat analyst estimates every year going out the next few years they certainly won't beat every single year but what i am suggesting is that growth estimates seem fairly reasonable given one their their own ability to grow their underlying business and their growth by acquisition strategy that being said let's jump over to our discounted free cash flow calculation to see if broadcom stock is worth buying today okay so we can see that when we take analyst estimates and discount them back to today well we get a fair value for the entire company of about 716 per share but generally we're going to want to account for the debt for their company's debt net debt debt minus cash in this whole calculation so broadcom has about 40 billion dollars in debt about 11 billion dollars in cash we adjust that's this calculation for net debt and we end up with a fair value for broadcom stock of about 645 per share right now broadcom's trading closer to 560 dollars per share that means that if we believe analyst estimates are at least somewhat close well then there looks to be upside of about 15 percent and given the stability of their broader business and the what we can say is the long time optimism around the types of products that they produce well it seems to me that broadcom stock could be a very good buy today now of course it depends on each of our own investment portfolios i know personally i own intel although i am really tempted to add broadcom to my portfolio as well because i like the growth i like what they're doing and i think it's possible management keeps acquiring other companies and keeps growing so i'll let you know if i'm going to add it to my portfolio but we're also running we're also managing a few different investment portfolios over in our private investing community for example we have a dividend portfolio that we're managing that we're building over there broadcom currently has a dividend yield of about two or three percent so this could fit well in that portfolio they also are offering a decent amount of growth so it could fit well in our growth portfolio so there is a decent amount of choices for a company like this now if you're curious to see if we add broadcom or what stocks we do add to the different portfolios that we're building or even if you just want to know how to build a solid investment portfolio perhaps you want to consider joining our investment community we do private investing live streams on building investment portfolios or how to analyze stocks on fridays we do a quick discount of free cash flow calculation uh live stream where we take the tickers at the company that the community throws at us we do a quick calculation of the of that particular stock a whole bunch of different stocks and see if they worth doing a deeper dive on so i will leave a link to our patreon page which is ultimately the gateway to get into the private investing community i got a link to that in the description below and thank you so much for sticking with me all the way to the end of the video i really do appreciate it thank you and i'll see in the next video