저자: Dividendology채널운영자 · 외국인
요약 보기
브로드컴은 실적 호조(매출 약 25% 성장, AI 매출 77% 성장, 강한 가이던스)로 최근 조정(250→184달러) 후에도 매력적 밸류에이션이라 주장. 역DCF 분석상 시장은 약 18.8%의 FCF 성장을 반영 중이며 이는 단기적으로 달성 가능하다고 봄. 배당은 2016~2025 CAGR 32%로 고속 성장, 본인 배당률(YOC) 4.18%, 포트폴리오 수익률 약 265%. 보유를 지속하겠다는 입장.
다듬은 글
Broadcom just released their latest quarter's earnings and at the moment they're trading $183 per share, up about 2% on the day. And if we look at the stock over the past year, it's done well. It's up close to 36%. But we can see there's been a lot of price action, especially in the last few months.
If we take a closer look, what's going on with the share price? We can see it looks like in mid December it jumped from $180 per share all the way up to $250. So what happened right here? Well, this is when the company released their Q4204 earnings. And if you're not familiar, Broadcom had a goal. Their goal in 2024 was to get AI revenue as a percentage of semiconductor solutions up to 25%.
And so, for reference, in 22 it was around 10% and 2023 it was at 15%. But here's where it came in at for 2024. The actual was around 35%. So that's about $10 billion higher than their 2024 target. So obviously the market loved this news and so we saw a huge run up in the share price and all the way through January they were trading close to around $240 to $250 per share but then we had a pretty large sell-off in late January.
This is the deepseek news and the huge scare for these AI companies when it comes to deepsek is that they were spending too much on capital expenditures and along with this we've seen the market continue to sell off in the last few months. But what we've seen from this earnings report from Broadcom paints a much different story.
one that still makes me remain quite bullish actually. Now, to start off, if we look at this earnings report, we can see they beat on top and bottom lines, and revenue year-over-year was actually up close to around 25%. So, we're talking about pretty rapid growth. But perhaps what's even more important is Q1 results for Broadcom and guidance suggested that AI spending isn't slowing down.
If we scroll down, we can see Broadcom's record first quarter revenue and adjusted Ebida were driven by both AI semiconductor solutions and infrastructure software. Q1 AI revenue grew 77% year-over-year to 4.1 billion and infrastructure software grew 47% year-over-year to 6.7 billion and then they basically gave very strong guidance.
So this was all great news for Broadcom. Now if you aren't familiar with AVGO whatsoever, let's go ahead and jump over to the stock screener and take a closer look at this company. And all this data will load in. And like always, if you'd like to download any of these spreadsheets you see and also get access to the ticker data add-on in Google Sheets that allows you to automatically import stock financial straight into your spreadsheet, then you can head over to tickerdata.com at the link in the description.
Now, just off a quick glance, we can see revenue per share for this company has grown dramatically over the past decade, going from $1.70 all the way up to $11.15 just in a 10-year time period. So, we're talking about explosive growth. And we can see the same has been true for free cash flow per share going from 31 all the way up to about $4.20.
Now when we look at earnings, we can see yes, it's grown tremendously over the past decade, but 2024 saw a pretty large drop off from the previous 3 years. Now why is this? Well, one of the things we have to understand is Broadcom has really ramped up its research and development expenses. If we come up here, let's update this to look at Broadcom.
Again, thanks to ticker data, the data will load in. And look at just how much research and development spending has ramped up since Q4 of 2023. I mean, we're talking about a massive increase. And this is expected to be the case moving forward for quite some time because future growth potential has grown so much for this company.
But here's what's also really exciting. Even with this increased spending, look at how the gross profit ratio has continued to climb over the past decade. Now it was a little bit lower in 2024 obviously again because of that increased research and development expense but just look at the revenue versus cost of revenue charted out.
I mean revenue was seeing explosive growth gross profit ratio is getting even stronger and even with the slight decline in 2024 which again is to be expected it came in at 63% when even just a few years ago was around 45% or even later around 44%. Now let's talk about the actual business model here for a moment.
They have two main revenue segments. They have semiconductor solutions and then they have infrastructure software. And as of right now, semiconductor solutions makes up the majority of the revenue. But if we take a closer look at how these different revenue segments have been growing, here's Semiconductor Solutions since Q1 of 2022.
Again, honestly, pretty good growth, but look at revenue from infrastructure software. We're talking about explosive growth. Now, to be fair, some of this is due to acquisitions the company has made, but those acquisitions are obviously paying off quite well. But along with this growth we're seeing in infrastructure software, we're going to see higher gross margins.
We're going to see more operational efficiency and there'll be less overhead costs. So in reality, both revenue segments are doing quite well and have pretty nice projected future growth. Now let's take a moment to talk about the actual dividend from this company. The amount they're paying out in dividends and how that dividend has grown.
If we jump over to Seeking Alpha, we can see the starting yield for this company is currently sitting at about 1.32%. Seems like a low starting dividend yield, but look at the dividend growth since 2016. From 2016 to 2025, the company has a dividend compounded annual growth rate of 32%. That is rapid dividend growth.
And I've actually held this stock in my portfolio for a few years now. And I want to give you an example of why this is so powerful. Let's jump over to my dividend dashboard and blow up my dividend yield on cost. Right here we can see my yield on cost for Broadcom is currently sitting at about 4.18%.
4.18% on a stock that is currently yielding just 1.32%. Now the reason that this has happened is one because this company has been rapidly growing their dividend over the past 3, five, and 10 years. Look at that 5-year dividend history. Look at the 10-year dividend history. We're talking about rapid dividend growth.
But also, if you can buy these stocks at good valuations when they have higher starting dividend yields, it's going to boost your yield on cost. So, let's look at an example. If we jump over to the dividend yield tab here on Seeking Alpha, again, link to Seeking Alpha down in the description. But, if you bought them just around 5 years ago, your yield on cost very well could easily be over 10, 11, or even 12%.
And if we zoom out and look 10 years ago, your yield on cost could easily be above 20% in just a 10year time period. And that doesn't even account for if you're reinvesting those dividends. That is the power of dividend growth investing. Now, if we look at Broadcom from a free cash flow perspective, I'll plug in AVGO.
And what we can see just based off a quick glance at this free cash flow is this most recent quarter was their highest quarter of free cash flow ever. So, we're still seeing tremendous growth in this area. We're seeing improvements in the margins as well. Now, one of the things I do have to mention is if we jump back over to the stock screener, we can see it looks like in 2024, this company actually did issue some new shares, which a lot of the times for people is a little bit of a red flag.
But in the case of these hyperrowth stocks, if they can do it at the right valuation, this can actually be a good move for the company. It provides more capital for them to do things like reinvest back into the business. Again, this could only make sense if there's a lot of growth potential. But if we jump back over to seeking Alpha and look at some of these estimated growth rates to start off, look at revenue growth year-over-year.
We're talking about 44%. If we scroll down, look at earnings per share, Ford looking long-term growth over the next 3 to 5 years, 21 to 24% projections. Look at the Ford looking free cash flow per share growth projection, 28.44%. So, let's just look at earnings estimates to get an idea of what other analysts are saying.
They're saying we could expect earnings growth of around 35.23% over the next year. the next year close to 17% and the next year around 20%. So there's still massive growth projected into this company which is obviously great. This is something we'd love to see but it has to be at the right price. So with this recent selloff of Broadcom going from around $250 per share all the way down to $184 per share is the company trading at an attractive valuation.
And when it comes to stocks with very high growth projections, the best way to break this down is by inverting. This is a Charlie Munger method. It's the reverse discounted cash flow analysis. And basically what we're doing is we can see how much growth the market is pricing into Broadcom and then asking ourselves is that justified.
So for example, if we assume 0% free cash flow growth, we come to a reverse DCF price per share of just $41.83, but the stock is trading at $184.75. So obviously the market is pricing in free cash flow growth in the future. So what if we bump this up to 5%. We get to $64 at 10% $95. If we bump it up to 15%, we start getting closer at about $140.
Let's bump it up to 18%. We're almost there. And if we bump it up to around 19%, we get a little above that current share price. So maybe around 18.8%. And we can see that gets us very close to the current share price for the company. So the question we have to ask ourselves, can this company achieve this free cash flow growth rate over the next decade of around 18.8%.
And from what we're seeing based off analyst projections and something I do tend to agree with is I do think that's actually quite achievable especially over the short term. If they can achieve these growth rates over the short term, even if the growth is a little bit slower in years 5 to 10, they can still easily achieve that total level of free cash flow growth.
So over the short term with stocks like this, there can obviously be a lot of volatility, but I don't actually think this is an overvalued stock. Even with a forward-looking price to earnings of about 27.44, 44. The growth this company can achieve absolutely justifies it. And this is a stock I've held in my portfolio for a while now.
If we jump back over to my investment dashboard and blow up my growth chart, this is actually the biggest winner in my portfolio. I'm currently up about 265%. And at one point when the stock was trading above 240, $250 per share, I was up over 300%. So again, there's obviously going to be a lot of volatility, but that's completely to be expected with these higher growth stocks.
But then of course along with this we're going to see a lot of dividend growth. And if the long-term goal of your portfolio is to one day be able to live off dividends like my goal is then these are the exact types of stocks we should be looking for stocks that have low payout ratios high free cash flow growth because that allows them to grow their dividend at a very high rate moving forward.
So for me personally I actually think Broadcom's at a decent valuation. It's a stock I'm excited to continue to hold in my portfolio. The recent earnings report I think looked great. So I'm excited to see what the next decade looks like for this company. But go ahead and let me know what you think of this stock in the comments down below.
And like always, if you'd like to download any of my spreadsheets and also get access to the ticker data add-on in Google Sheets that allows you to automatically import stock financial straight into your spreadsheet, then you can head over to tickerdata.com at the link in the description. So, with all that being said, thank you guys so much for watching and please don't forget to like and subscribe to the
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